1099 vs W-2 Income Comparator
Comparing a Fiverr/Upwork contract to a salaried offer? This calculator shows the exact tax difference between being a W-2 employee and a 1099 independent contractor at the same gross income.
Side-by-side comparison
W-2 Employee
1099 Contractor
Tax breakdown
Worked example
At $100,000 gross in California, a W-2 employee takes home $66,163.325/yr while a 1099 contractor takes home $68,557.775/yr. The difference is $2,394.45 in additional taxes because 1099 contractors pay both halves of Social Security + Medicare (SE tax).
Why 1099 costs more
- Self-employment tax (15.3%): As a W-2 employee, your employer pays half of Social Security + Medicare. As 1099, you pay both halves.
- No employer benefits: W-2 employees often get health insurance, 401k matching, PTO — contractors pay 100% of these.
- Business expense deduction: 1099 contractors can deduct legitimate business expenses (home office, equipment, software), which reduces taxable income.
- Quarterly estimated payments: No employer withholds taxes, so contractors must estimate and pay quarterly.
- No unemployment insurance: 1099 workers don't qualify for unemployment benefits.
Frequently asked questions
Why is 1099 net pay lower than W-2?
1099 contractors pay both halves of Social Security + Medicare (15.3% total) through self-employment tax, while W-2 employees only pay 7.65% — the employer covers the other half. That's the primary difference at the same gross income.
Can a contractor write off expenses to offset the difference?
Yes. Legitimate business deductions (home office, equipment, software, insurance, professional development) reduce your net SE earnings, which lowers both SE tax and income tax. W-2 employees have much fewer deduction options.
At what income does it become worth going 1099?
There's no universal breakpoint. A contractor typically needs to charge a 15–30% premium over a comparable W-2 salary to achieve the same net income, accounting for SE tax, no benefits, and higher self-insurance costs.
Does this calculator account for business expenses?
No. This shows the tax difference at equal gross income. In practice, 1099 contractors deduct business expenses, which reduces taxable income. Add estimated expenses to the W-2 salary for a more realistic comparison.
Can I switch between W-2 and 1099 without changing pay?
If your employer converts you from W-2 to 1099 at the same pay, you'll take home less because you're now responsible for the employer's share of FICA. The tax burden increases ~7.65% at the same gross salary.
What about state taxes — are they different too?
State income tax is generally the same whether you're W-2 or 1099 (based on taxable income). However, some states have additional unemployment taxes or different rules for estimated payments.