Question 1

Is a $100,000 1099 contract better than a $75,000 W-2 salary?

Accepted Answer

Not necessarily. After SE tax, health insurance, and retirement contributions, the $75,000 W-2 may leave you with more take-home pay than a $100,000 1099. Use this calculator to compare net income, including the value of paid leave and benefits.

Question 2

What is the SE tax rate in 2026?

Accepted Answer

Self-employment tax is 15.3%: 12.4% for Social Security (capped at $176,100 in earnings) and 2.9% for Medicare (no cap, plus 0.9% for high earners above $200,000 single / $250,000 married). This is double the 7.65% FICA an employee pays.

Question 3

Do 1099 contractors get retirement benefits?

Accepted Answer

No. Contractors must contribute to their own retirement accounts. You can deduct SEP-IRA contributions up to $69,000 or Solo 401(k) up to $69,000 in 2026. The calculator includes deductions for these contributions.

Question 4

How much does health insurance cost for a 1099 contractor?

Accepted Answer

Individual health insurance typically costs $400-800 per month depending on age, plan, and state. You can deduct 100% of health insurance premiums above-the-line as a self-employed person, but this is factored into net income, not AGI.

Question 5

Can I deduct home office and car expenses as a 1099 worker?

Accepted Answer

Yes. You can deduct the business portion of home office (up to $1,500 using $5/sq ft or actual expenses), internet, phone, and car (67¢/mile in 2026). These deductions reduce your net business income before SE tax and income tax.

Question 6

Do I need a business license to be a 1099 contractor?

Accepted Answer

It depends on your city, county, and profession. Many jurisdictions require a business license regardless of size. Check with your local government.

Question 7

What are the W-2 advantages?

Accepted Answer

W-2 employees receive employer-paid health insurance, paid leave (sick and vacation), retirement matching, and workers compensation protection. The employer covers 7.65% FICA and also pays unemployment insurance.

Question 8

How do I calculate the equivalent W-2 salary for a 1099 rate?

Accepted Answer

Take your 1099 rate and adjust for SE tax (divide by ~1.13), health insurance, retirement, and paid leave. This calculator automates this process using your state and salary information.

W-2 vs 1099 Decision Tool

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