# 1099 vs W-2: which pays more?

Compares 2026 take-home pay from a W-2 salary and from 1099 contract income: employee Social Security and Medicare against self-employment tax, federal income tax both ways, and the employer’s share.

- Page: https://www.acalculator.org/finance/1099-vs-w2-calculator
- JSON spec: https://www.acalculator.org/finance/1099-vs-w2-calculator.json
- Version: 5417d71f3fa7

## Default answer

Example with the default inputs (Filing status Single, W-2 salary $80,000.00, 1099 income $95,000.00, Business expenses (optional) $3,000.00, Hours worked a year (optional) 2,080): With a W-2 salary of $80,000.00 and $95,000.00 of 1099 income, 1099 take-home minus W-2 take-home is $6,968.81.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| status | Filing status | Your 2026 federal filing status. |
| salary | W-2 salary | Yearly wages the employee job pays (W-2 box 1). |
| contract | 1099 income | Yearly amount the contract pays you before expenses (Form 1099-NEC). |
| expenses | Business expenses (optional) | Business costs you pay as a contractor, such as equipment, software and travel (not your own health insurance). |
| hours | Hours worked a year (optional) | Hours a year in either job, to show hourly rates; 2,080 is 40 hours for 52 weeks. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| difference | 1099 take-home minus W-2 take-home | Above $0 the contract leaves you more after tax; below $0 the W-2 job does. |
| better | More take-home pay | Which option leaves more after federal taxes. |
| w2TakeHome | W-2 take-home pay | Salary − Social Security and Medicare − federal income tax. |
| contractTakeHome | 1099 take-home pay | 1099 income − business expenses − self-employment tax − federal income tax. |
| w2Payroll | W-2 Social Security and Medicare | Your share: 6.2% of wages up to $184,500 + 1.45% + the 0.9% Additional Medicare Tax. |
| contractPayroll | Self-employment tax | 15.3% (12.4% up to $184,500 + 2.9%) of 92.35% of net profit + the 0.9% Additional Medicare Tax. |
| w2IncomeTax | Federal income tax (W-2) | Federal income tax after credits on the salary. |
| contractIncomeTax | Federal income tax (1099) | Federal income tax after credits on the profit, after half of the self-employment tax and the QBI deduction. |
| qbi | QBI deduction (1099) | The qualified business income deduction the contractor gets (Form 8995). |
| employerCost | Employer’s cost of the W-2 pay | Salary + the employer’s 6.2% Social Security (up to $184,500) and 1.45% Medicare. |
| w2Hourly | W-2 pay an hour | Salary ÷ hours. |
| contractHourly | 1099 rate an hour | 1099 income ÷ hours. |
| employerHourly | Employer’s cost an hour | The employer’s cost of the W-2 pay ÷ hours. |

## Method

W-2 take-home = salary − (6.2% × min(salary, $184,500) + 1.45% × salary) − federal tax on the wages (Additional Medicare Tax included). 1099 take-home = profit − federal tax on the profit as self-employment income, where profit = 1099 income − expenses (self-employment tax on 92.35% of profit, half of it deducted, QBI deduction). Difference = 1099 take-home − W-2 take-home.

## Assumptions

- Tax year 2026, federal taxes only (no state or local tax). The only income is the job or the contract, with the standard deduction and no credits other than any earned income credit.
- Benefits are not counted: an employee’s health insurance, retirement match and paid leave, and a contractor’s own health insurance and retirement plan deductions.
- Above the Form 8995 income threshold the QBI deduction is taken as the $400 minimum only (Form 8995-A is not included). Amounts up to $1 trillion; 1 to 8,784 hours a year. An estimate, not tax advice.

## Worked examples

1. status = single, salary = $80,000.00, contract = $95,000.00, expenses = $3,000.00, hours = 2,080 gives w2Payroll = $6,120.00, w2IncomeTax = $8,776.00, w2TakeHome = $65,104.00, contractPayroll = $12,999.19, contractIncomeTax = $6,928.00, contractTakeHome = $72,072.81, qbi = $13,880.08, difference = $6,968.81, better = 1099 contract, employerCost = $86,120.00, w2Hourly = $38.46, contractHourly = $45.67, employerHourly = $41.40. Source: IRS Topic 751 (6.2% Social Security and 1.45% Medicare each for employer and employee; $184,500 wage base for 2026; 0.9% Additional Medicare Tax withheld over $200,000), https://www.irs.gov/taxtopics/tc751; IRS Topic 554 (self-employment tax: 12.4% Social Security and 2.9% Medicare on 92.35% of net earnings; half deductible), https://www.irs.gov/taxtopics/tc554; 2026 Form 1040 by the site tax engine (IRS Rev. Proc. 2025-32 rates and standard deduction; Schedule SE; Form 8959; Form 8995 QBI deduction).
2. status = single, salary = $200,000.00, contract = $200,000.00 gives w2Payroll = $14,339.00, w2IncomeTax = $36,734.00, contractPayroll = $28,234.30, contractIncomeTax = $25,196.31, difference = -$2,357.61, better = W-2 job, employerCost = $214,339.00. Source: IRS Topic 751 (6.2% Social Security and 1.45% Medicare each for employer and employee; $184,500 wage base for 2026; 0.9% Additional Medicare Tax withheld over $200,000), https://www.irs.gov/taxtopics/tc751 (6.2% × 184,500 = 11,439; 1.45% × 200,000 = 2,900).
3. status = mfj, salary = $60,000.00, contract = $60,000.00, hours = 2,000 gives w2Payroll = $4,590.00, w2TakeHome = $52,567.00, contractPayroll = $8,477.73, contractTakeHome = $49,639.27, difference = -$2,927.73, w2Hourly = $30.00, contractHourly = $30.00, employerHourly = $32.30. Source: IRS Topic 751 (6.2% Social Security and 1.45% Medicare each for employer and employee; $184,500 wage base for 2026; 0.9% Additional Medicare Tax withheld over $200,000), https://www.irs.gov/taxtopics/tc751; IRS Topic 554 (self-employment tax: 12.4% Social Security and 2.9% Medicare on 92.35% of net earnings; half deductible), https://www.irs.gov/taxtopics/tc554; 2026 Form 1040 by the site tax engine (IRS Rev. Proc. 2025-32 rates and standard deduction; Schedule SE; Form 8959; Form 8995 QBI deduction).

## FAQ

### Is 1099 or W-2 better?

It depends on the numbers. As a 1099 contractor you pay both halves of Social Security and Medicare (15.3% of 92.35% of profit), but you deduct half of it, your business expenses and usually a 20% QBI deduction. As a W-2 employee you pay 7.65% and your employer pays the other 7.65% and often benefits. Compare the take-home pay, then add the value of the benefits you would give up.

### How much more should a 1099 job pay than a W-2 job?

At least what the employer would spend: the salary plus its 7.65% share of Social Security and Medicare (6.2% stops at $184,500 of wages in 2026), plus what you would spend on health insurance, retirement savings and unpaid time off. An $80,000 salary costs the employer $86,120 before benefits.

### What is the self-employment tax for 2026?

15.3% of 92.35% of your net profit: 12.4% for Social Security on up to $184,500 and 2.9% for Medicare on all of it, plus a 0.9% Additional Medicare Tax above $200,000 ($250,000 joint). You deduct half of the self-employment tax when you figure your adjusted gross income.

### How do I turn a salary into a 1099 hourly rate?

Divide the yearly amount by the hours you will work. 2,080 hours is 40 hours a week for 52 weeks; a contractor who takes 4 weeks off and spends time on unpaid admin may bill far fewer. Type your hours to see the W-2 pay an hour, the 1099 rate an hour and the employer’s cost an hour.

### Why is the income tax lower on 1099 income?

Because the contractor deducts half of the self-employment tax and takes the qualified business income (QBI) deduction of up to 20% of the profit. That lowers taxable income, but the higher self-employment tax usually costs more than it saves.

### What does this leave out?

State and local income taxes, benefits (health insurance, retirement match, paid leave), the self-employed health insurance and retirement plan deductions, and the QBI deduction above the 2026 Form 8995 threshold ($201,750, $403,500 joint), where the calculator takes only the $400 minimum.

## Sources

- IRS, Topic no. 751, Social Security and Medicare withholding rates (reviewed 24-Sep-2026): 6.2% Social Security each for employer and employee, 1.45% Medicare each, the $184,500 wage base for 2026, and the 0.9% Additional Medicare Tax withheld on wages over $200,000 with no employer match. https://www.irs.gov/taxtopics/tc751 (retrieved 2026-10-19)
- IRS, Topic no. 554, Self-employment tax (reviewed 24-Sep-2026): 12.4% Social Security and 2.9% Medicare on 92.35% of net earnings, $400 or more of net earnings, half deductible, Additional Medicare Tax thresholds $250,000 joint, $125,000 married filing separately and $200,000 others. https://www.irs.gov/taxtopics/tc554 (retrieved 2026-10-19)
- IRS, Rev. Proc. 2025-32 (Internal Revenue Bulletin 2025-45): 2026 tax rate tables (section 4.01), standard deduction (section 4.14), Form 8995 thresholds (section 4.26) and the $400 minimum QBI deduction (section 2.12). https://www.irs.gov/irb/2025-45_IRB (retrieved 2026-10-19)
- IRS, 2025 Tax Table (Instructions for Form 1040): taxable income under $100,000 is taxed at the middle of its row (rows of $0 to $5, $5 to $15 and $15 to $25, then $25 rows up to $3,000 and $50 rows from $3,000), in whole dollars. https://www.irs.gov/instructions/i1040tt (retrieved 2026-10-19)