Enter both offers

Type the freelance annual revenue and deductible business expenses on the 1099 side, then the equivalent W-2 salary and the dollar value of employer benefits (health insurance, 401(k) match, paid time off) on the employee side. The comparison updates instantly as you type.

2

Set your tax context

Choose your filing status (Single or Married Filing Jointly) and enter your combined state income-tax rate. These drive the federal brackets, standard deduction, and state tax applied to each path.

3

Read the verdict

The hero panel shows which arrangement leaves more money in your pocket after self-employment tax, income tax, and benefits. The Break-Even Revenue stat tells you the freelance billings you'd need to match the salary's true value.

4

Dig into the tabs

Open Tax Comparison for a line-by-line breakdown of every tax on each side, and Benefits Gap to see the home-office deduction and Solo 401(k) headroom that offset the benefits an employer would otherwise provide.

Self-employment tax

SE tax = (Revenue − Expenses) × 0.9235 × (12.4% up to the wage base + 2.9% Medicare)

Freelancers pay both the employee and employer halves of Social Security and Medicare on 92.35% of net business income. The 12.4% Social Security portion stops at the annual wage base ($176,100 for 2025); the 2.9% Medicare portion is uncapped.

Half-SE-tax deduction

Deduction = SE tax ÷ 2

Half of the self-employment tax is deductible above the line, reducing the income that flows into the federal brackets.

Freelance net take-home

Net = NetSE − SE tax − Federal tax − State tax

Federal tax is computed on net business income minus the half-SE deduction and the standard deduction, using 2025 IRS brackets. State tax is applied to net business income at your entered rate.

W-2 true value

True value = (Salary − FICA − Federal tax − State tax) + Employer benefits

Employees pay 7.65% FICA (the employer covers the matching 7.65%). Adding the dollar value of employer benefits converts the salary into an apples-to-apples figure against freelance net.

Break-even freelance revenue

Find Revenue such that Freelance Net(Revenue) = W-2 true value

Because freelance net rises smoothly with revenue, the calculator solves for the gross billings that exactly match the W-2 offer's true value — the rate you must clear to break even on going independent.

Written by Calculover Editorial Team Updated 2026-05-30 3 sources Methodology & limitations

Editorial accountability

Author: {{^authorProfileUrl}}Calculover Editorial Team{{/authorProfileUrl}} - Personal-finance content team

Owner: Calculover Editorial Team - Editorial standards owner

Last reviewed: 2026-05-30

Last verified: 2026-05-30

Methodology

Self-employment tax applies 15.3% (12.4% Social Security capped at the 2025 $176,100 wage base plus 2.9% Medicare) to 92.35% of net business income; half is deducted before federal tax. Federal income tax uses 2025 IRS brackets and the 2025 standard deduction ($15,000 single / $30,000 MFJ); W-2 FICA is 7.65%. Benefits are added to W-2 net to form a true-value figure, and break-even revenue is solved by bisection.

Assumption: Tax year 2025 federal brackets, standard deduction, and Social Security wage base ($176,100) are used; state tax is treated as a flat rate on income.

Assumption: The freelancer takes the standard deduction and does not claim the QBI deduction or elect S-corporation status.

Limitations & guidance

Estimates exclude the 20% QBI deduction, S-corp salary/distribution planning, tax credits, local taxes, and itemized deductions, so high earners should confirm figures with a tax professional.

Employer benefits value is a user estimate; under- or over-stating it shifts the verdict directly.

Professional guidance: This calculator is for informational and educational purposes only and is not tax, legal, financial, or investment advice. Tax rules change and individual situations vary — consult a qualified CPA or tax professional before making a freelance-versus-employment decision.

Primary sources

IRS — Self-Employment Tax (Social Security and Medicare Taxes)

IRS — Topic No. 554, Self-Employment Tax

IRS Rev. Proc. 2024-40 — 2025 inflation-adjusted tax brackets and standard deduction

Self-employment (SE) tax The 15.3% tax (12.4% Social Security + 2.9% Medicare) a freelancer pays on 92.35% of net business income, covering both the employee and employer shares of payroll tax.

1099 vs W-2 A 1099 worker is an independent contractor who receives gross pay and owes self-employment tax; a W-2 employee has payroll taxes withheld and the employer pays half of FICA plus benefits.

FICA Federal Insurance Contributions Act payroll tax: 6.2% Social Security (up to the wage base) plus 1.45% Medicare withheld from an employee's paycheck, matched dollar-for-dollar by the employer.

Employer benefits value The annual dollar value of perks a salary includes — employer health-insurance premiums, 401(k) match, paid time off, and other benefits — that a freelancer must replace out of pocket.

Standard deduction The flat amount subtracted from income before federal brackets apply: $15,000 for Single and $30,000 for Married Filing Jointly in 2025.

Solo 401(k) headroom The extra tax-deferred retirement space a freelancer gains: an employee deferral plus up to 20% of net self-employment income as an employer contribution, capped at the annual additions limit ($70,000 in 2025).

Show all 7 terms

Break-even rate The freelance revenue at which take-home pay exactly equals the true value of a salary offer — the minimum you must bill to be no worse off than taking the job.

👩‍💻

Software engineer weighing a contract

Higher 1099 rate vs a salary

Freelance revenue 120,000 Business expenses 15,000 W-2 salary 90,000 Employer benefits 15,000

After self-employment tax and income tax, the freelancer's net is compared against the salary plus its $15,000 benefits package. The break-even stat reveals the contract revenue needed to truly match the job — usually well above the headline salary because the freelancer self-funds payroll tax and benefits.

🎨

Creative freelancer eyeing a staff role

Lower revenue with rich benefits

Freelance revenue 70,000 Business expenses 12,000 W-2 salary 55,000 Employer benefits 9,000

With modest billings, the self-employment tax bite and lost benefits often tip the verdict toward the W-2 role. The Benefits Gap tab quantifies how much the home-office deduction and Solo 401(k) headroom would need to close the difference.

🧑‍💼

Senior consultant filing jointly

High earner, married

Freelance revenue 200,000 Business expenses 30,000 W-2 salary 150,000 Employer benefits 25,000

At higher incomes the Social Security wage-base cap limits self-employment tax, and the wider married brackets reduce federal tax, so a strong consulting rate can comfortably out-earn the salary even after replacing benefits.

Choosing between a 1099 contract and a W-2 salary is rarely a straight rate-versus-rate decision. This calculator translates both offers into after-tax, benefits-adjusted take-home pay so you can see which one actually leaves you with more money — and what freelance rate it would take to match a salary.

How the comparison works

The freelance side starts from gross revenue, subtracts deductible business expenses, then applies self-employment tax on 92.35% of the remainder: 12.4% for Social Security up to the wage base and 2.9% for Medicare with no cap. Half of that tax is deducted before federal income tax is figured on 2025 brackets and your standard deduction. The W-2 side withholds 7.65% FICA (your employer quietly pays the other 7.65%), applies the same federal brackets, and then adds the dollar value of employer benefits to produce a true-value figure you can compare apples-to-apples.

Inputs and what they mean

Freelance revenue is your gross billings; business expenses are the legitimate costs you can deduct (software, equipment, a home office, professional development). The W-2 salary is the comparable job offer, and employer benefits value is the annual worth of health insurance, a 401(k) match, and paid time off you'd give up by freelancing. Filing status and state tax rate set the brackets and state burden applied to both sides. The single input that moves the result most is usually employer benefits, because every dollar of benefits is a dollar a freelancer must replace with higher billings.

Limits and edge cases

This is a planning estimate, not a tax return. It does not model the 20% qualified business income (QBI) deduction, S-corporation salary/distribution splits, the additional 0.9% Medicare surtax interaction with spousal income, local taxes, credits, or itemized deductions beyond the standard deduction. State tax is applied as a flat rate to keep the comparison transparent. For a binding decision — especially above roughly $80,000 of net self-employment income, where an S-corp election or QBI planning can change the math materially — confirm the numbers with a CPA or tax professional.

Is freelancing worth it financially?+

It depends on your rate, expenses, and the benefits you'd give up. Freelancers pay the full 15.3% self-employment tax and self-fund health insurance and retirement, so a 1099 rate has to clear the salary's true value — typically 1.2x to 1.5x the headline salary — before freelancing comes out ahead. Enter your numbers and read the Break-Even Revenue stat to see your personal threshold.

How do freelance and W-2 taxes compare?+

A W-2 employee pays 7.65% FICA and the employer matches it. A freelancer pays both halves as 15.3% self-employment tax on 92.35% of net income, but deducts half of it and can write off business expenses and a home office. The Tax Comparison tab shows every line — SE tax versus FICA, the half-SE deduction, federal, and state — side by side.

What is the true cost of freelancing in taxes?+

Beyond income tax, the freelancer's extra cost is the employer half of payroll tax (about 7.65% of net income) plus the value of benefits an employer would otherwise provide. Partially offsetting that, freelancers deduct half their SE tax, deduct business expenses, can claim a home-office deduction, and can shelter far more in a Solo 401(k) than an employee can in a workplace plan.

What freelance rate equals a salary?+

The Break-Even Revenue figure answers exactly this: it solves for the gross 1099 revenue whose after-tax net equals the salary plus its benefits value. As a rule of thumb the answer lands well above the salary, because the freelancer must cover self-employment tax and replace employer-paid benefits out of those higher billings.

Can I share or save my comparison?+

Yes. Your inputs are encoded into the page URL, so copying the link reproduces the exact scenario for a colleague or accountant, and the calculator also remembers your last inputs locally. Use the Copy and CSV buttons to export a summary.

Freelance vs W-2 Income Comparison

How to Use This Calculator

Enter both offers

Set your tax context

Read the verdict

Dig into the tabs

Formula & Methodology

Trust, Methodology & Sources

Key Terms Explained

Real-World Examples

Software engineer weighing a contract

Creative freelancer eyeing a staff role

Senior consultant filing jointly

Understanding the Freelance vs W-2 Income Comparison

How the comparison works

Inputs and what they mean

Limits and edge cases

Frequently Asked Questions

Freelance vs W-2 Income Comparison

How to Use This Calculator

Enter both offers

Set your tax context

Read the verdict

Dig into the tabs

Formula & Methodology

Trust, Methodology & Sources

Key Terms Explained

Real-World Examples

Understanding the Freelance vs W-2 Income Comparison

How the comparison works

Inputs and what they mean

Limits and edge cases

Frequently Asked Questions

Keep Exploring

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