How much more should a 1099 rate be vs W-2?

Rule of thumb: 25–40% higher to make up for self-paid FICA, unpaid time off, and health insurance.

Does the 1099 side really get a 20% deduction?

Yes — Section 199A QBI deduction for qualifying pass-through income, subject to income and SSTB limits.

What about retirement?

1099 contractors can sock away much more via Solo 401(k) or SEP-IRA — not modeled here but a real advantage.

1099 vs W-2 Calculator

Should you take the W-2 job or the 1099 contract? See actual take-home with FICA, SE tax, expenses, and benefits.

1099 vs W-2 — take-home compare

W-2 salary offer

W-2 benefits value (health, 401k match)

1099 contract rate (annualized)

1099 deductible expenses

How it works

W-2: subtract FICA (7.65%) + federal income tax, then add the benefits value.
1099: subtract deductible expenses, SE tax (15.3% on 92.35%), apply 20% QBI, then federal tax.
Compare the two net numbers side-by-side.

Assumptions

Single filer, standard deduction, 2025 brackets, federal only.
QBI applied as a flat 20% — phaseouts above $241,950 single not modeled.
Benefits value is treated as cash-equivalent for the W-2 side.

Frequently asked questions

Related calculators

Self-employment tax
S-Corp salary
Business deductions

These calculators provide estimates for general planning only and are not tax, legal, or financial advice. Always verify with a licensed CPA for your specific situation.