Hourly to Salary: 1099 vs W-2 Rate Calculator (2026)

A $50-an-hour contract isn't the same as a $50-an-hour job. As a W-2 employee, your employer pays half of Social Security and Medicare tax and may cover health insurance, a retirement match and paid time off. As a 1099 contractor you pay both halves and cover the rest yourself. Enter a W-2 wage and this calculator shows the 1099 hourly rate you'd need to come out even. It runs in your browser; nothing you type is sent anywhere.

W-2 hourly wage $ W-2 hours per week The W-2 side assumes you're paid for all 52 weeks, including paid holidays and time off. Value of employer benefits per year (health premiums paid, retirement match, etc.) $ Extra business expenses as a contractor per year $ Unpaid weeks off per year as a 1099 contractor Billable hours per week as a 1099 contractor

Compares money before income tax. Both sides are reduced by Social Security and Medicare tax only; income tax is left out to keep the comparison simple. The 1099 side also gets a small income tax break (the deduction for half of self-employment tax), which this calculator ignores, so the result leans slightly high. It also doesn't include the 0.9% Additional Medicare Tax, state taxes, or the different tax treatment of specific benefits.

How it works

W-2 side: annual wages = hourly wage × hours per week × 52. The employee pays 6.2% Social Security (up to the 2026 limit of $184,500) and 1.45% Medicare, per IRS Topic 751. Add the value of the benefits your employer provides to get your W-2 “total value” after payroll tax.
1099 side: a contractor pays 15.3% (12.4% + 2.9%) on 92.35% of net profit, with the 12.4% part capped at $184,500 (the same 2026 math as our self-employment tax calculator). The calculator finds the profit that, after that tax, equals your W-2 total value.
Add expenses: revenue needed = profit + your extra business expenses.
Divide by hours: billable hours = billable hours per week × (52 − unpaid weeks off). The 1099 rate = revenue ÷ billable hours.

Worked example

Step	Amount
W-2: $40/hour × 40 hours × 52 weeks	$83,200.00
Employee Social Security 6.2% + Medicare 1.45%	−$6,364.80
+ Employer benefits value	+$10,000.00
W-2 total value after payroll tax	$86,835.20
1099 profit needed (so profit − SE tax = $86,835.20)	$101,123.49
+ $3,000 expenses = revenue needed	$104,123.49
6 weeks unpaid: 46 weeks × 40 billable hours	1,840 hours
1099 hourly rate to match	$56.59 (about 1.41× the W-2 wage)

Assumptions to understand

Benefits are your estimate. We can't know what your employer's plan is worth. Look at your offer or benefits summary for the employer share of health premiums, any retirement match, and similar items.
Paid time off matters. The W-2 side is paid for 52 weeks. The contractor side is paid only for weeks worked, so unpaid weeks off raise the rate you need.
Billable hours: if you can't bill 40 hours a week as a contractor, enter a lower number to see how much higher the rate has to be.
Income tax is not modeled. Federal and state income tax depend on your whole situation. Health insurance premiums and retirement contributions may have their own deductions, which this simple comparison leaves out.
Contractor status isn't a free choice. Whether you're a 1099 contractor or a W-2 employee depends on the working relationship, not on what you and the client agree to. If you're unsure, check the IRS worker classification guidance.

Tools that help

Pricing as a contractor starts with knowing your taxes. Use the freelance hourly rate calculator to build a rate from the take-home income you want, the self-employment tax calculator for the exact tax on your profit, and the estimated taxes guide for payment dates. Contractors receive 1099 forms from clients and payment apps; our 1099-NEC vs 1099-K guide explains them.

Not tax advice. Results are estimates built from the assumptions you enter. Your actual taxes depend on your full situation, deductions, state and local taxes. Check with a tax professional.

FAQ

How much more should a 1099 contractor charge than a W-2 employee earns?

It depends on benefits, time off and billable hours. With the defaults above it's about 41% more. With no benefits and no unpaid time off, the extra is smaller and comes mainly from paying both halves of Social Security and Medicare tax.

What is the self-employment tax rate for 2026?

15.3%: 12.4% Social Security (on up to $184,500 of combined earnings in 2026) and 2.9% Medicare, applied to 92.35% of net profit. The IRS lets you deduct the employer-equivalent half when figuring income tax.

Why do W-2 workers only pay 7.65%?

The 15.3% total is split. Per the IRS, employees and employers each pay 6.2% Social Security and 1.45% Medicare. A contractor pays both parts.

Can I convert this to a salary?

Yes. The W-2 annual wages shown in the results are the salary equivalent of your hourly wage at your hours (hourly × hours per week × 52). The 1099 revenue figure is the matching annual contract revenue.

Does this include health insurance for the contractor?

The benefits input is the value you'd lose by leaving the job, so the extra revenue replaces that value. For a rate built from your own actual health and retirement costs, use the hourly rate calculator.