Does a 1099 contractor or W-2 employee keep more pay?
At the same gross income, a W-2 employee usually keeps more — the employer covers half of FICA (7.65%), while a 1099 contractor pays the full 15.3% self-employment tax alone. Business expense deductions and the QBI deduction can close some of that gap for contractors, but rarely all of it. Enter your numbers below for your exact comparison.
“1099 contractors pay more in taxes” is true more often than not, but by how much depends entirely on your income, expenses, and filing status — not a flat rule of thumb.
This calculator runs the real math for both sides: FICA and federal income tax for a W-2 employee, versus self-employment tax, the 50% SE tax deduction, the QBI deduction, and federal income tax for a 1099 contractor earning the exact same gross amount.
Enter your gross income and filing status, and optionally add your deductible 1099 business expenses under Advanced Settings. You’ll see a full side-by-side breakdown, not just a single headline number.
How to Use the W-2 vs 1099 Tax Calculator
Enter your gross income
Type your gross annual income, or tap a preset ($50k, $75k, $100k, $150k).
Select your filing status
Single, Head of Household, or Married Filing Jointly — sets your standard deduction and bracket.
Add 1099 expenses (optional)
Open Advanced Settings to enter deductible expenses, applied only to the 1099 side.
Compare take-home pay
See W-2 vs 1099 net pay side by side, with the full tax breakdown for each.
W-2 vs 1099 Tax Calculator
Compare your exact take-home pay as a traditional employee versus an independent contractor making the exact same gross amount.
Sets your 2026 standard deduction ($16,100 / $24,150 / $32,200).
⚙️ Advanced: Customize Your Comparison (Optional)
1099 only. Reduces SE-taxable profit and income tax.
SEP-IRA / Solo 401(k). Reduces income tax only, not SE tax.
Optional — enter your own state’s rate. Leave blank for a federal-only comparison. Look up your rate on your state revenue department’s site.
Health insurance + 401(k) match you’d have to self-fund. Shown as a separate “comparable value” line, not mixed into net pay.
W-2 Employee
Employer pays other 7.65% FICA
1099 Contractor
Includes 50% SE Tax Deduction
⚠️ Based on federal taxes only, a 1099 contractor pays $2,087.40 MORE than a W-2 employee.
*Estimates use 2026 federal brackets (IRS Rev. Proc. 2025-32). QBI is a simplified estimate (not SSTB-limited). Does not include state taxes, cost of self-funded health insurance, or missing employer benefits like 401(k) matching, unless entered above.
W-2 vs 1099: What’s Actually Different
A W-2 employee and a 1099 contractor earning identical gross pay do not take home the same amount, and the gap is driven almost entirely by two things: who pays the employer half of payroll tax, and which deductions each side can access.
An employer withholds 7.65% of a W-2 employee’s pay for Social Security and Medicare, and separately pays a matching 7.65% out of its own pocket — that employer share never touches the employee’s paycheck or tax return. A 1099 contractor has no employer, so they owe the full 15.3% themselves as self-employment tax, calculated on their net profit rather than gross revenue.
On the other side of the ledger, a contractor can deduct legitimate business expenses that a W-2 employee generally cannot, and may qualify for the 20% QBI deduction on top of that. Those two things claw back some of the SE tax disadvantage — sometimes most of it, depending on expenses and income level.
💡 Same gross pay, different starting point
Think of it as: W-2 pay already has half its payroll tax paid by someone else before you ever see the number. 1099 gross pay hasn’t had anything taken out yet — all of it, employer share included, is yours to account for.
How Self-Employment Tax Works
Self-employment tax is calculated on 92.35% of your net profit (revenue minus business expenses), not your full revenue — this accounts for the fact that an employer would normally pay their share on a lower wage base.
That adjusted amount is taxed at 12.4% for Social Security, up to the annual wage base, plus 2.9% for Medicare with no cap. If your SE-taxable income is high enough, an additional 0.9% Medicare surtax applies above $200,000 (single/HOH) or $250,000 (married). See the IRS’s own explanation of self-employment tax (Social Security and Medicare taxes) for the full rules.
You then get to deduct half of your total SE tax from your income before calculating federal income tax — this roughly mirrors how a W-2 employee’s employer-paid FICA share is never taxed as income in the first place.
The QBI Deduction, Simplified
The Qualified Business Income deduction lets many self-employed people deduct up to 20% of their qualified business income from taxable income, on top of the standard deduction. This calculator applies it as the lesser of 20% of your qualifying business income or 20% of your taxable income before the QBI deduction — a reasonable simplification for most contractors.
The full rule is more complex for high earners in certain service businesses (accounting, law, consulting, health, and similar “specified service trades or businesses”), where the deduction phases out at higher income. This calculator does not model that SSTB limitation, so high-income service-business contractors may see a more optimistic number here than they’d actually get.
| Filing Status | 2026 Standard Deduction | 10% Bracket Ends | Top 37% Bracket Starts |
|---|---|---|---|
| Single | $16,100 | $12,400 | $640,600 |
| Head of Household | $24,150 | $17,700 | $640,600 |
| Married Filing Jointly | $32,200 | $24,800 | $768,700 |
Worked Example
A single filer earning $75,000 gross, no 1099 expenses entered for the contractor side, standard deduction applied:
- W-2: FICA = $75,000 × 7.65% = $5,738. Taxable income = $75,000 − $16,100 = $58,900, federal tax ≈ $7,741. Net take-home ≈ $61,521.
- 1099: Net profit = $75,000. SE tax ≈ $10,595 (on 92.35% of profit). Half of SE tax ($5,298) is deductible. QBI deduction ≈ 20% of the lower of business income or taxable income before QBI. Federal tax on the reduced taxable amount ≈ $6,900. Net take-home ≈ $57,505.
- At this income and with no business expenses claimed, the 1099 contractor nets roughly $4,000 less in this example — entirely from paying both halves of payroll tax.
Add a few thousand dollars of real business expenses (home office, mileage, software, equipment), and that gap narrows — sometimes closes — since expenses reduce SE tax as well as income tax on the 1099 side.
What This Calculator Doesn’t Include
⚠️ Federal taxes only
This is a federal-tax comparison. It does not include state income tax, which can meaningfully change the picture depending on where you live. It also doesn’t price in the cost of self-funded health insurance for a contractor, or the value of employer benefits a W-2 employee typically gets for free or subsidized — 401(k) matching, paid time off, unemployment insurance eligibility, and workers’ compensation coverage among them.
Frequently Asked Questions — W-2 vs 1099 Tax Calculator
Do 1099 contractors pay more tax than W-2 employees?
What is self-employment tax?
What is the QBI deduction and who qualifies?
What are the 2026 federal tax brackets used in this calculator?
Does this calculator include state taxes or health insurance costs?
Can I deduct business expenses as a 1099 contractor?
Methodology — How This Calculator Works
Federal income tax for both sides is calculated using the official 2026 IRS brackets (Revenue Procedure 2025-32): seven marginal rates — 10%, 12%, 22%, 24%, 32%, 35%, 37% — applied progressively to taxable income, with thresholds that differ by filing status. The 2026 standard deduction used is $16,100 (single/MFS), $24,150 (head of household), and $32,200 (married filing jointly).
W-2 FICA is calculated as 6.2% Social Security (up to the $184,500 wage base) plus 1.45% Medicare, plus an additional 0.9% Medicare surtax above $200,000 (single/HOH) or $250,000 (married) — this is the employee’s share only; the employer-paid matching share isn’t shown since it never reduces the employee’s paycheck.
1099 self-employment tax is calculated on 92.35% of net profit (gross income minus entered business expenses): 12.4% Social Security up to the same wage base, plus 2.9% Medicare, plus the same 0.9% additional Medicare surtax where applicable. Half of total SE tax is deducted above the line before income tax is calculated, matching the actual IRS treatment.
The QBI deduction is estimated as the lesser of 20% of net business income (after the SE tax deduction) or 20% of taxable income before the QBI deduction — a simplified version of the real calculation that does not model the SSTB phase-out that applies to certain service businesses at higher income levels.
The three optional Advanced Settings fields are all user-supplied, so none of them can go stale the way a hardcoded rate table would: state income tax rate is applied as a flat rate to each side’s taxable income (using the pre-QBI base on the 1099 side, since most states don’t conform to the federal QBI deduction); retirement contributions (SEP-IRA/Solo 401(k)) reduce 1099 income tax only, not self-employment tax, matching actual IRS treatment; and employer benefits value is shown as a separate “Comparable Value” line rather than folded into Net Take-Home Pay, so the primary comparison stays a clean like-for-like tax calculation while still letting you see the fuller picture if you want it.
This calculator does not model: local income tax, self-employed health insurance premium deductions, child tax credits or other credits, unpaid/non-billable weeks, or the SSTB-specific QBI phase-out. All figures reflect federal rules as published through mid-2026 and are estimates for planning purposes only.