{
  "slug": "contractor-vs-employee",
  "title": "Contractor vs Employee Calculator",
  "heading": "1099 Contractor vs W-2 Employee Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/contractor-vs-employee",
  "summary": "The hourly rate a contractor needs to match a salary.",
  "description": "Contractors pay the full 15.3% self-employment tax, buy their own health insurance, and get no paid time off. A rough rule is a 25–40% premium over the equivalent W-2 hourly rate.",
  "formula": "Required rate = (Salary + benefits + SE tax) ÷ billable hours.",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=contractor-vs-employee",
  "inputs": [
    {
      "id": "salary",
      "label": "W-2 salary",
      "kind": "number",
      "hint": null,
      "default": 120000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "benefits",
      "label": "Employer benefits value",
      "kind": "number",
      "hint": null,
      "default": 18000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "ptoDays",
      "label": "Paid time off + holidays",
      "kind": "number",
      "hint": null,
      "default": 25,
      "unit": "days",
      "min": 0,
      "max": 60
    },
    {
      "id": "billableWeeks",
      "label": "Billable weeks per year",
      "kind": "number",
      "hint": null,
      "default": 46,
      "unit": null,
      "min": 20,
      "max": 52
    },
    {
      "id": "hoursWeek",
      "label": "Billable hours per week",
      "kind": "number",
      "hint": null,
      "default": 35,
      "unit": null,
      "min": 5,
      "max": 60
    },
    {
      "id": "overhead",
      "label": "Business overhead",
      "kind": "number",
      "hint": null,
      "default": 6000,
      "unit": "$/yr",
      "min": 0,
      "max": null
    },
    {
      "id": "seTax",
      "label": "Extra self-employment tax",
      "kind": "number",
      "hint": null,
      "default": 7.65,
      "unit": "%",
      "min": 0,
      "max": 20
    }
  ],
  "outputs": [
    {
      "id": "rate",
      "label": "Hourly rate you need as a contractor",
      "format": "currency",
      "hint": null,
      "primary": true
    },
    {
      "id": "dayRate",
      "label": "Equivalent day rate",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "w2Rate",
      "label": "W-2 equivalent hourly",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "premium",
      "label": "Premium over W-2 rate",
      "format": "percent",
      "hint": null,
      "primary": false
    },
    {
      "id": "hours",
      "label": "Billable hours per year",
      "format": "number",
      "hint": null,
      "primary": false
    },
    {
      "id": "annual",
      "label": "Annual billings at that rate",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "W-2 salary: 120000 $",
      "Employer benefits value: 18000 $",
      "Paid time off + holidays: 25 days",
      "Billable weeks per year: 46",
      "Billable hours per week: 35",
      "Business overhead: 6000 $/yr",
      "Extra self-employment tax: 7.65 %"
    ],
    "outputs": [
      "Hourly rate you need as a contractor: $96.28",
      "Equivalent day rate: $770.27",
      "W-2 equivalent hourly: $57.69",
      "Premium over W-2 rate: 66.9%",
      "Billable hours per year: 1,610",
      "Annual billings at that rate: $155,016.00"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter w-2 salary ($).",
      "Enter employer benefits value ($).",
      "Enter paid time off + holidays (days).",
      "Enter billable weeks per year.",
      "Enter billable hours per week.",
      "Enter business overhead ($/yr).",
      "Enter extra self-employment tax (%).",
      "Read your hourly rate you need as a contractor on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "salary": 72000,
        "benefits": 11000,
        "ptoDays": 15,
        "billableWeeks": 28,
        "hoursWeek": 21,
        "overhead": 3500,
        "seTax": 4.59
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "salary": 120000,
        "benefits": 18000,
        "ptoDays": 25,
        "billableWeeks": 46,
        "hoursWeek": 35,
        "overhead": 6000,
        "seTax": 7.65
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "salary": 192000,
        "benefits": 29000,
        "ptoDays": 40,
        "billableWeeks": 52,
        "hoursWeek": 56,
        "overhead": 9500,
        "seTax": 12.240000000000002
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "How does the 1099 contractor vs w-2 employee calculator work?",
      "a": "Contractors pay the full 15.3% self-employment tax, buy their own health insurance, and get no paid time off. A rough rule is a 25–40% premium over the equivalent W-2 hourly rate. The underlying maths is: Required rate = (Salary + benefits + SE tax) ÷ billable hours."
    },
    {
      "q": "What do I need to enter?",
      "a": "7 values: w-2 salary, employer benefits value, paid time off + holidays, billable weeks per year, billable hours per week, business overhead, and extra self-employment tax. Each field starts with a sensible default, so you can change one number at a time and watch the result move."
    },
    {
      "q": "What does the hourly rate you need as a contractor result mean?",
      "a": "It is returned as a money amount in US dollars and updates live as you edit the inputs, so you can compare two or three versions of a scenario in a few seconds."
    },
    {
      "q": "Is this calculator free, and do I need an account?",
      "a": "Yes, it's free, and no account is required. Nothing you type is stored on our servers — the maths runs entirely in your browser."
    },
    {
      "q": "How accurate is the result?",
      "a": "It applies the standard formula exactly, so the arithmetic is precise. Results are estimates before tax, fees, and inflation unless an input explicitly covers them."
    },
    {
      "q": "Who is this tool for?",
      "a": "It's built for anyone comparing money scenarios before committing — budgeting a payment, sanity-checking a quote, or seeing what a change in rate or term actually costs."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/salary-negotiation",
    "https://www.revenuelab.fyi/toolbox/job-offer-compare"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Contractor vs Employee Calculator (https://www.revenuelab.fyi/toolbox/contractor-vs-employee)"
}