What W-2 salary is my 1099 rate equivalent to?

Take your hourly rate times billable hours to get gross 1099 income, then subtract both halves of the 15.3% self-employment tax and the cost of health insurance a W-2 job would provide. What remains is your real take-home, and the W-2 salary that matches it is typically 8 to 15 percent below the gross annualized rate. This tool computes it with 2026 federal figures.

How much more should a contractor charge than an employee?

Enough to cover the roughly 7 percent employer-side payroll tax a W-2 job would pay, plus about 22 percent in self-funded benefits (health, retirement, and unpaid time off). A common rule of thumb is 1.3 to 1.5 times the equivalent salary rate, and this tool shows the exact figure for your inputs.

CeoCult · Freelance Finance

What is your 1099 rate really worth as a salary?

Q: Why is 1099 take-home lower than the hourly rate suggests?

A 1099 contractor pays both the employee and employer halves of Social Security and Medicare (15.3 percent of net), buys their own health insurance, funds their own retirement, and is not paid for time off. A W-2 employer covers those, so the same take-home requires a lower salary number.

Enter a contract hourly rate. This tool runs the reverse of every rate calculator and shows the W-2 salary it actually equals, after both halves of the self-employment tax and the benefits you now fund yourself.

2026 federal figures

Estimate for education only, not tax, legal, or financial advice. Simplified federal model: it ignores AMT, NIIT, itemized deductions, credits, state and local taxes, and QBI phase-outs. State income tax widens every gap. Consult a professional.

Your contract

Enter your rate. The assumptions below are pre-filled from national averages and are yours to change.

1099 hourly rate ($)

Filing status

Adjust assumptions

Billable hours per year

2,080 = full-time. Most freelancers bill fewer, which widens the gap.

Self-funded health insurance ($/yr)

2026 ACA benchmark ~ $7,500/yr.

Retirement match a W-2 would give (%)

Unpaid weeks off per year

Business expenses ($/yr)

How this works

A 1099 contractor pays the full 15.3 percent self-employment tax (both the employee and employer halves of Social Security and Medicare) on net earnings, buys their own health insurance, funds their own retirement, and earns nothing during time off. A W-2 employer covers the employer payroll half and usually provides health coverage, a retirement match, and paid leave.

So the tool annualizes your rate, subtracts the self-employment tax and health cost to find your real take-home, then solves for the W-2 salary that leaves an employee with the same spendable cash. The retirement match and paid time off a W-2 job adds are shown separately, as value on top. All figures use 2026 federal constants (SSA wage base $184,500; IRS self-employment tax; Rev Proc 2025-32 brackets; BLS and KFF benefit data).

Questions people ask

What W-2 salary is my 1099 rate equivalent to?: Gross annualized rate minus both halves of the 15.3 percent SE tax and self-funded health, solved for the matching salary. It usually lands 8 to 15 percent below the gross number.
How much more should a contractor charge than an employee?: Enough for the roughly 7 percent employer payroll tax plus about 22 percent in self-funded benefits. A 1.3 to 1.5 times multiple is the rule of thumb; this tool gives the exact figure.
Why is 1099 take-home lower than the rate suggests?: Both payroll-tax halves, self-bought health, self-funded retirement, and unpaid time off all come out of the same gross number.
Does billing fewer hours change the answer?: Yes, a lot. At 1,600 billable hours instead of 2,080 the equivalent salary drops sharply. Adjust the hours field to see it.

1099 vs W-2 calculator Freelance rate calculator

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