1099 vs W-2 Calculator
Same pay, two very different tax bills. Put a yearly amount in and see what an employee (W-2) keeps versus what an independent contractor (1099) keeps for 2026 — federal taxes only, before any state tax.
| W-2 employee | 1099 contractor | |
|---|---|---|
| Gross pay | $0.00 | $0.00 |
| Federal income tax | −$0.00 | −$0.00 |
| Social Security | −$0.00 | −$0.00 |
| Medicare | −$0.00 | −$0.00 |
| Extra Medicare tax (0.9%) | −$0.00 | −$0.00 |
| Total tax | −$0.00 | −$0.00 |
| Take-home pay | $0.00 | $0.00 |
Why the 1099 column pays more tax
Look at the Social Security and Medicare rows. An employee pays 6.2% and 1.45% — the other half comes from the employer and never touches the paycheck. A contractor pays both halves (12.4% and 2.9%) as self-employment tax. Two things soften that: the tax applies to only 92.35% of the contractor's profit, and half of it is deducted before figuring the income tax — which is why the contractor's income tax row is a little lower than the employee's. It just isn't lower by enough to erase the extra payroll tax at the same pay.
What this comparison leaves out
The employer's half of the payroll tax. On top of a W-2 salary, the employer pays another 7.65% in Social Security and Medicare taxes, plus unemployment insurance. That's real money spent on the employee that never appears in the W-2 column above — and a contractor has to cover the equivalent themselves.
Benefits. Health insurance, a 401(k) match, paid time off, and employer-paid disability or life insurance are usually part of a W-2 package and usually absent for contractors. A few thousand dollars of 401(k) match alone can outweigh the tax gap.
Safety nets. Employees are generally covered by unemployment insurance if the job ends, and by workers' compensation if they're hurt on the job. Contractors generally are not, unless they buy their own coverage.
Who sends the tax money, and when. An employee's tax is withheld from every paycheck automatically. A contractor gets paid in full and must send the IRS quarterly estimated payments themselves — owing the same tax, but with the discipline (and the underpayment-penalty risk) on their side of the table.
Business expenses. This comparison treats the whole amount as the contractor's profit. Real contractors deduct ordinary business expenses — gear, software, mileage, a home office — and every deducted dollar lowers both the self-employment tax and the income tax. A contractor with significant expenses will do better than this table shows.
How this calculator works
W-2 side: the employee's federal tax is calculated with our regular paycheck engine (IRS Publication 15-T, 2026) — federal only, before any state tax. 1099 side: self-employment tax follows Schedule SE rules on the full amount (92.35% of it is taxed at 15.3%, with the Social Security wage base of $184,500 for 2026). We estimate the contractor's income tax with the same federal tables after the standard self-employment adjustment — that is, on the pay minus one half of the self-employment tax. It's an estimate, not a tax return: actual contractor taxes depend on deductions, credits, the qualified business income deduction, and state taxes, none of which are modeled here.
Estimate for general information only — not tax, legal, or financial advice. Methods: IRS Publication 15-T (2026); IRS Topic No. 554 and Schedule SE (Form 1040). See our methodology & sources.