Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
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
$155,016
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One click, a permanent link with your numbers baked in.
How to use this
- 1Enter w-2 salary ($).
- 2Enter employer benefits value ($).
- 3Enter paid time off + holidays (days).
- 4Enter billable weeks per year.
- 5Enter billable hours per week.
- 6Enter business overhead ($/yr).
- 7Enter extra self-employment tax (%).
- 8Read your hourly rate you need as a contractor on the right — it updates as you type.
- 9Hit Share to keep the scenario or send it to someone.
About this calculator
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.
Worked example
Using the values the calculator loads with:
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 %
Results
- 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: $155,016.00
What each field means
Inputs
- W-2 salary ($)
- The w-2 salary used in the calculation, measured in $. Starts at 120000 $ so you have a working example on load.
- Employer benefits value ($)
- The employer benefits value used in the calculation, measured in $. Starts at 18000 $ so you have a working example on load.
- Paid time off + holidays (days)
- The paid time off + holidays used in the calculation, measured in days. Starts at 25 days so you have a working example on load. Accepted range: 0–60 days.
- Billable weeks per year
- The billable weeks per year used in the calculation. Starts at 46 so you have a working example on load. Accepted range: 20–52.
- Billable hours per week
- The billable hours per week used in the calculation. Starts at 35 so you have a working example on load. Accepted range: 5–60.
- Business overhead ($/yr)
- The business overhead used in the calculation, measured in $/yr. Starts at 6000 $/yr so you have a working example on load.
- Extra self-employment tax (%)
- The extra self-employment tax used in the calculation, measured in %. Starts at 7.65 % so you have a working example on load. Accepted range: 0–20 %.
Results
- Hourly rate you need as a contractor
- Returned as a money amount in US dollars and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Equivalent day rate
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- W-2 equivalent hourly
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Premium over W-2 rate
- Returned as a percentage. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Billable hours per year
- Returned as a whole number. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Annual billings at that rate
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
How does the 1099 contractor vs w-2 employee calculator work?
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.
What do I need to enter?
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.
What does the hourly rate you need as a contractor result mean?
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.
Is this calculator free, and do I need an account?
Yes, it's free, and no account is required. Nothing you type is stored on our servers — the maths runs entirely in your browser.
How accurate is the result?
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.
Who is this tool for?
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.
Accuracy and 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.
Related tools
Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Contractor vs Employee Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/contractor-vs-employee
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/contractor-vs-employee" target="_blank" rel="noopener">Contractor vs Employee Calculator — RevenueLab</a> (2026).</p>
Source: [Contractor vs Employee Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/contractor-vs-employee) (2026).