Work & Income

Salary vs Contractor Calculator

A higher contractor rate doesn't always mean more money. See the full picture after taxes, benefits, and hidden costs on both sides.

Net annual take-home difference
$0
better as W2 employee
W2 net: $0 vs Contractor net: $0

W2 Employee

What your employer pays toward your health plan — not what you pay
e.g. 3% match on $120k = $3,600
Dental, vision, life insurance, FSA, commuter benefits, etc.
Each day has a dollar value — as a contractor you fund PTO yourself
Federal + state, effective rate (not bracket)

1099 Contractor

Your total invoiced amount before any deductions
Self-paid plan — typically $600-900/month for individual coverage
Solo 401k or SEP-IRA — you fund this entirely yourself
Software, equipment, accountant, professional dues
15.3% for SE tax (FICA both sides) — note: half is deductible
What this doesn't model: job security differences, career growth, the hassle of invoicing and contracts, geographic flexibility, or the psychological value of stability vs autonomy. These are real but can't be expressed as dollar amounts.
Related: How to value benefits FAQ Glossary Freelance Rate Calculator