Why the 1099 vs w2 pay calculator matters
Contract rates look larger than salaries because they are gross of everything an employer used to quietly pay on your behalf, and the gap is bigger than most people assume. This page turns that decision into a handful of inputs you can defend in a budget review: volume, unit cost, rate of adoption, and time. The output is a planning baseline, not a promise — it tells you whether the idea deserves a vendor quote, a pilot, or a pass.
- • Biggest swing factor: the share of hours you actually bill, since gaps between contracts are unpaid
- • Second-order factor: self-funded benefits, especially health insurance
- • Often ignored: the employer payroll tax you now cover in full
What actually changes the answer
the share of hours you actually bill, since gaps between contracts are unpaid moves this number first, then self-funded benefits, especially health insurance. Run a conservative case and an upside case before you commit. If the maths only works in the upside case, treat it as a time-boxed test with a kill date rather than a line in next year's plan.
What to do with the result
If the net comes out below your old salary, raise the rate rather than the hours — utilisation is the harder variable to fix.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
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Read the guideYouTube Creator Tax Guide 2026: 1099-NEC, Self-Employment, and the 24% Withholding Trap
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Read the guideFAQ
What does the 1099 vs w2 pay calculator work out?
It applies Monthly saving = units saved × value per unit × efficiency%; Net = saving − recurring cost; Payback months = upfront cost ÷ net to the values you enter for billable hours per month, contract hourly rate ($), monthly self-funded benefits ($), employer tax gap per year ($), share of hours that actually bill. Contract rates look larger than salaries because they are gross of everything an employer used to quietly pay on your behalf, and the gap is bigger than most people assume.
How accurate is this 1099 vs w2 pay calculator?
A cash comparison, not a tax filing. It ignores state-specific rules, spouse coverage and equity compensation. Replace the defaults with your own invoice, usage export, payroll data, statement, or vendor quote before making a commitment — the maths is exact, so the answer is only as good as the inputs you feed it.
Which input should I stress-test first?
the share of hours you actually bill, since gaps between contracts are unpaid. Re-run with a pessimistic value for it; if the decision flips, that assumption is the thing you need real data on before signing anything. After that, check self-funded benefits, especially health insurance and the employer payroll tax you now cover in full.
Which scenario should I start from?
Start with the preset closest to your situation — conservative, expected case, best case — then edit the sliders. Presets are realistic starting points, not benchmarks to match, and every change updates the result instantly.
What should I do after running the numbers?
If the net comes out below your old salary, raise the rate rather than the hours — utilisation is the harder variable to fix. A useful planning benchmark to compare against: A contractor rate usually needs to be 25–40% above the salaried hourly equivalent to break even.
Can I share or save this calculation?
Yes. Your inputs are written into the page URL, so copying the link shares the exact scenario you are looking at — the person who opens it sees the same numbers. You can also export the inputs and results to CSV or PDF from the result card and keep it with the rest of your workings.
How this calculator is built
Independently maintained
Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
Sourced from primary data
Benchmarks come from public AdSense / Stripe / IRS disclosures and reader-submitted data — never third-party "$X per view" claims. Full methodology.
Last editorial review
Reviewed on a rolling quarterly cycle. Dated reviews are published on the methodology record for each calculator.
Editorial standards
See our editorial policy and disclaimer. Results are estimates, not advice.