US: 1099 Contractor vs W-2 Employee
A US independent contractor pays self-employment tax - both halves of Social Security and Medicare (15.3%) - where an employee pays just 7.65%. See how that changes take-home.
How to use it
- Enter your annual income. The gross salary or contract income to compare.
- Pick filing status. Single or married filing jointly.
- See the difference. Employee (FICA 7.65%) versus contractor (SE tax 15.3%, half deductible).
FAQs
Do 1099 contractors take home less than W-2 employees?
On the same gross, usually yes - a contractor pays self-employment tax of 15.3% (both the employee and employer halves of Social Security and Medicare) versus an employee's 7.65%. Half of the SE tax is deductible against income tax, which softens it, but contractors typically need a higher rate to match employee take-home.
What about an S-corp?
Electing S-corporation status can reduce self-employment tax by splitting pay into salary and distributions. This tool compares a sole-proprietor 1099 contractor with a W-2 employee, not the S-corp route.
Is it exact?
It's an estimate: it ignores business expenses, the QBI deduction and state-specific rules.