1099 Form + 1099 vs W-2 Calculator
Find the 1099 contractor income and hourly rate that matches a W-2 job's take-home pay after self-employment tax, the QBI deduction, health insurance, retirement match and unpaid days off, with every 1099 form and Schedule C explained.
1099 vs W-2 calculator: equivalent contractor rate
How the 1099 vs W-2 comparison works
An employee's take-home pay is matched against what a contractor keeps after paying for everything an employer would cover:
- Self-employment tax: 15.3% (12.4% Social Security up to $184,500 plus 2.9% Medicare) on 92.35% of net profit, versus 7.65% for an employee. Half of SE tax is deductible for income tax.
- QBI deduction: most contractors can deduct 20% of qualified business income; the One Big Beautiful Bill Act made it permanent. Above $201,750 single ($403,500 joint) in 2026, limits apply to some service businesses, which this calculator doesn't model.
- Health insurance and retirement: the contractor pays the premium the employer would have paid (deductible as self-employed health insurance) and funds their own retirement match.
- Unpaid time off: a contractor bills only working days, so 20 days off leaves 1,920 billable hours, not 2,080.
With the defaults, an $80,000 W-2 job ($38.46 an hour) needs about $96,700 of 1099 income, roughly $50.38 an hour billed (1.31 times the W-2 rate), to leave the same take-home pay plus the 401(k) match.
1099 form
A business that pays an independent contractor reports it on Form 1099-NEC, due to the contractor and the IRS by January 31. Starting with payments made in 2026, a 1099-NEC is required when a business pays someone $2,000 or more in a year (up from $600), and the threshold will be indexed to inflation from 2027. W-2 employees get a Form W-2 instead, with tax already withheld.
1099 forms
| Form | Reports |
|---|---|
| 1099-NEC | Pay to independent contractors ($2,000+ from 2026) |
| 1099-MISC | Rents, prizes, royalties and other income ($2,000+ from 2026 for most boxes) |
| 1099-K | Card and payment-app sales, when over $20,000 and 200 transactions |
| 1099-INT / 1099-DIV | Interest and dividends |
| 1099-B | Sales of stocks, crypto and other investments |
| 1099-R | Retirement plan and IRA distributions |
| 1099-G | Unemployment benefits and state tax refunds |
Schedule C
Contractors report 1099 income and business expenses on Schedule C (Profit or Loss From Business), filed with Form 1040. Net profit from Schedule C flows to Schedule SE for self-employment tax and to Form 1040 for income tax. You must report all business income, even if no 1099 was issued.
Schedule C tax form: what goes where
Part I is gross receipts (including every 1099-NEC and 1099-K), returns and cost of goods sold. Part II lists expenses: advertising, car and truck expenses, contract labor, insurance, office expenses, supplies, travel, 50% of business meals, utilities and the home office deduction (Form 8829 or the simplified method). Line 31 is your net profit or loss. For quarterly payments on that profit, use the 1099 estimated tax calculator.
Common questions
How much more should a 1099 contractor charge than a W-2 employee?
With this calculator's defaults, an $80,000 W-2 job ($38.46 an hour) equals about $50.38 an hour as a contractor.
What is the self-employment tax rate for 2026?
15.3% on 92.35% of net profit: 12.4% Social Security up to $184,500 of earnings plus 2.9% Medicare.
What is the 1099-NEC threshold for 2026?
$2,000 for payments made in 2026, up from $600; it will be indexed for inflation from 2027.
Do 1099 contractors get the QBI deduction?
Usually: 20% of qualified business income, permanent under the One Big Beautiful Bill Act, with limits for some service businesses above $201,750 single.
What is Schedule C?
The IRS form for reporting self-employment income and expenses; its net profit is used for income tax and self-employment tax.
Sources
- IRS: 2026 inflation adjustments (Rev. Proc. 2025-32), via Journal of Accountancy
- Social Security Administration: 2026 contribution and benefit base
- IRS: Self-employment tax (Social Security and Medicare taxes)
- Withum: One Big Beautiful Bill Act 1099 reporting changes
- Catalyst CPA: QBI deduction income limits 2026
- IRS: About Schedule C (Form 1040)
Related
General information, not financial, tax or legal advice. Check important numbers with the official source before acting on them.