2026 contractor tax comparison
1099 vs W-2 Tax Calculator
Compare after-tax income as a self-employed contractor versus a W-2 employee — including self-employment tax, federal income tax, and state tax.
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Frequently Asked Questions
How much more tax do I pay as a 1099 contractor?
At the same gross income, 1099 contractors typically pay more total tax because they owe self-employment tax on net earnings — both the employee and employer halves of Social Security and Medicare. Use the ExactTakeHome calculator to see the dollar difference for your state and income.
What is self-employment tax?
Self-employment tax is 15.3% on 92.35% of net self-employment income — covering both the employee and employer shares of Social Security and Medicare. W-2 employees pay only the 7.65% employee share through paycheck withholding.
Is it worth being 1099 instead of W-2?
It depends on your bill rate, deductible business expenses, and benefits. A 1099 contractor often needs a higher gross contract value to match W-2 take-home pay. This calculator shows the tax gap and how much more you would need to charge.
What business expenses can 1099 contractors deduct?
Common deductions include home office costs, equipment, software, professional development, health insurance (under specific rules), and business travel. Deductible expenses reduce net self-employment income and income tax, but they are still real cash costs.
Data Sources & Methodology
ExactTakeHome tax data is sourced from official government publications and verified against primary sources. Last verified: .
- Federal withholding: IRS Publication 15-T — Federal Income Tax Withholding Methods
- Social Security wage base: SSA 2026 Social Security Wage Base
- Medicare rates: IRS Topic No. 751 — Social Security and Medicare Withholding Rates
- State income tax: California Franchise Tax Board — 2026 California Employer's Withholding Schedules
Why 1099 taxes are higher
W-2 employees split FICA with their employer. Self-employed workers pay both halves through self-employment tax — 15.3% on 92.35% of net earnings, plus federal and state income tax on adjusted income after the half-SE-tax deduction.
This calculator estimates taxes only. Benefits, retirement matching, unemployment insurance, and paid time off are not included — factor those into any job or contract decision.