1099 vs W-2 Calculator (2026)

A W-2 employee on $60,000 costs a Texas employer 22.6% more than paying the same $60,000 to a 1099 contractor in 2026: $73,554.91 once payroll taxes ($4,875.04) and average benefits ($8,679.87) are added. At the same pay, the worker keeps $50,390 on a W-2 and $47,010.93 on a 1099, so a contractor needs $64,522.41 in receipts to match.

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The same work, W-2 or 1099

What the employee would earn on payroll.

40 hours × 52 weeks is 2,080. Used for hourly rates.

Sets the employer’s state unemployment tax. State income tax is not modelled.

Contractor pay, expenses, benefits and QBI

Leave blank to compare the same amount.

Default: the BLS private-industry average for insurance and retirement.

Prefilled with the state’s 2026 new-employer rate.

Extra cost of a W-2 employee, per year$13,554.91

22.6% more than paying a contractor $60,000

W-2 total cost
$73,554.91
Payroll taxes and benefits
$13,554.91
Break-even contractor rate
$35.36 an hour
Worker keeps on a W-2
$50,390.00
Worker keeps on a 1099
$47,010.93
  • Worker take-home leaves out state income tax: this calculator has no state income tax engine yet (Texas has none).

Employer view: W-2 vs 1099 cost

Paying a contractor $60,000 saves the employer $13,554.91 a year against a W-2 hire at the same pay, and the employer breaks even paying the contractor $35.36 an hour.

Employer view: a $60,000 W-2 employee in Texas vs a $60,000 contractor (2026)
LinePer yearSource
W-2 salary$60,000.00Your input
Social Security and Medicare7.65% employer share$4,590.04IRS Pub. 15 (2026) (opens in a new tab)Checked
FUTA0.6% of the first $7,000$42.00IRS Pub. 15 (2026) (opens in a new tab)Checked
Texas unemployment tax2.7% new-employer rate$243.00twc.texas.gov (opens in a new tab)Checked
Benefits14.47% of salary, BLS private-industry average (our arithmetic)$8,679.87BLS ECEC, June 2026 (opens in a new tab)Checked
W-2 total cost$73,554.91
Paid to the 1099 contractorNo payroll tax or benefits on top$60,000.00Your input
Extra cost of the W-2 hire22.6% more than the contractor$13,554.91
Break-even contractor pay$35.36 an hour over 2,080 hours$73,554.91Equals the W-2 total

Worker view: take-home on a W-2 vs a 1099

A worker keeps $50,390 of $60,000 on a W-2 and $47,010.93 on a 1099, before state income tax. The 1099 side uses the 2026 draft Schedule SE and draft Form 8959.

Worker view: take-home on $60,000, W-2 vs 1099, filing single (2026)
LineW-21099Source
Gross payW-2 wages or 1099 receipts$60,000.00$60,000.00Your input
Federal income tax2026 brackets, single, standard deduction−$5,020.00−$4,511.34Rev. Proc. 2025-32 (opens in a new tab)Checked
Social SecurityW-2: 6.2% withheld. 1099: 12.4% self-employment tax on 92.35% of profit−$3,720.00−$6,870.84Schedule SE (2026 draft) (opens in a new tab)Checked
MedicareW-2: 1.45%. 1099: 2.9%−$870.00−$1,606.89Schedule SE (2026 draft) (opens in a new tab)Checked
Take-home pay$50,390.00$47,010.93
1099 receipts to match the W-2 take-home$64,522.41

1099 vs W-2 by salary

The W-2 hire costs the employer more at every salary below, and the worker keeps more on the W-2. The last column is the 1099 pay that gives the worker the same take-home.

1099 vs W-2 in Texas by salary: employer premium, break-even rate and worker take-home, single filer (2026)
SalaryW-2 costs more byBreak-even contractor rateWorker keeps on W-2Worker keeps on 10991099 pay to match
$50,00022.7%$29.49$42,355.00$39,539.11$53,768.68
$60,00022.6%$35.36$50,390.00$47,010.93$64,522.41
$75,00022.5%$44.17$61,592.50$57,898.53$80,646.14
$100,00022.4%$58.85$79,180.00$74,254.70$107,528.19
$150,00022.3%$88.20$113,791.00$106,614.99$161,289.05

Do you pay more taxes on a 1099 or a W-2?

A 1099 worker pays more: both halves of Social Security and Medicare (12.4% + 2.9% on 92.35% of profit) instead of the employee’s 6.2% + 1.45%, so at $60,000 that is $3,887.73 more before income tax. Half of the self-employment tax is deductible, which narrows the gap a little.

What 1099 rate equals a W-2 salary?

There are two answers. The worker needs $64,522.41 in 1099 receipts to keep the same take-home as $60,000 on a W-2, while the employer breaks even paying up to $73,554.91, or $35.36 an hour. The gap between the two is benefits: the employer’s figure includes what a W-2 hire gets, which a contractor has to buy.

Do you owe tax on small 1099 income?

Yes, once your net earnings from self-employment reach $400 in a year you owe self-employment tax and file Schedule SE, whether or not a client sends you a Form 1099-NEC.

What are the downsides of 1099 work?

  • No withholding: you pay income and self-employment tax yourself, usually as quarterly estimates.
  • No employer benefits: health insurance, retirement and paid leave come out of your own receipts.
  • No unemployment insurance: contractors aren’t covered by state unemployment.

Who counts as a contractor depends on how the work is done, not on the contract’s label; see 1099 vs W-2 rules and forms, and confirm with an employment lawyer if you are unsure. If you hire on a W-2 instead, see every payroll plan ranked by cost.

Method and sources

The employer side uses IRS Publication 15 (2026), each state’s new-employer unemployment rate and the BLS private-industry average for benefits. The worker side uses the 2026 income tax brackets and standard deduction from Rev. Proc. 2025-32, self-employment tax from the 2026 draft Schedule SE and Additional Medicare Tax from the 2026 draft Form 8959. There is no state income tax engine yet, so outside Texas the worker’s take-home is before state tax. The QBI deduction option is simplified. For the employee’s full cost on its own, see what an employee really costs.

Frequently asked questions

Is a 1099 contractor cheaper than a W-2 employee?

For the employer, usually: at $60,000 in Texas a W-2 hire costs 22.6% more because of payroll taxes and benefits. The contractor pays those costs themselves, so expect a higher rate.

How are W-2 wages calculated?

W-2 wages for income tax are your pay before tax minus pre-tax deductions such as 401(k) contributions. Social Security and Medicare wages leave the 401(k) contributions in.

Does the calculator include state income tax?

No. There is no state income tax engine yet, so the worker's take-home ignores state tax; it is exact only in states with no income tax, such as Texas.

Are the self-employment tax figures final for 2026?

Not yet. They come from the IRS's 2026 draft Schedule SE and draft Form 8959, and we will re-check them when the final forms post.