Tax year 2026 · figures from IRS Rev. Proc. 2025-32
1099 vs W-2 Calculator
A free tool from Kordal Systems
Take-home pay as a contractor and as an employee on the same income, with payroll tax counted on both sides.
Example — replace with your numbers
Total income before deductions, from all 1099-NEC and 1099-MISC forms.
Deductible on Schedule C: home office, software, equipment, mileage, supplies.
Total federal tax $16,648. Quarterly payment $4,162.
Your 2026 federal tax estimate
Total federal tax
$16,648
20.8% effective rate
- Self-employment tax
- $11,304
- Federal income tax
- $5,344
- You keep
- $63,352
Quarterly payments
- Q1 · $4,162
- Q2 · $4,162
- Q3 · $4,162
- Q4 · $4,162
See the full breakdown
| Income | |
|---|---|
| 1099 gross revenue | $80,000 |
| Business expenses | −$0 |
| Net 1099 profit | $80,000 |
| Self-employment (SE) tax, Schedule SE | |
| Net SE earnings (× 92.35%) | $73,880 |
| Social Security tax (12.4%) | $9,161 |
| Medicare tax (2.9%) | $2,143 |
| Total SE tax | $11,304 |
| SE deduction, above the line | −$5,652 |
| Federal income tax | |
| Adjusted gross income | $74,348 |
| Standard deduction | −$16,100 |
| Taxable income before § 199A | $58,248 |
| Qualified business income | $74,348 |
| § 199A deduction | −$11,650 |
| Taxable income | $46,598 |
| Federal income tax | $5,344 |
| Totals | |
| Total federal tax | $16,648 |
| Effective federal rate | 20.8% |
| Self-employment tax as a share of profit | 14.1% |
| Each quarterly payment | $4,162 |
| Social Security wage base left | $184,500 |
Each line follows Schedule SE, the 2026 rate tables and Form 8995. See the formula for every one, with its source.
Estimate only, not tax advice. Federal tax on the inputs above; excludes credits, state tax and anything specific to your situation.
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- No sign-up
- Every figure sourced
Quick answer
Do 1099 contractors pay more tax than W-2 employees?
Both pay Social Security and Medicare. At $80,000, a W-2 employee has 7.65% withheld, $6,120, and a 1099 contractor pays 15.3% self-employment tax on 92.35% of profit, $11,304. The contractor then deducts half of that and takes a $11,650 § 199A deduction no employee can claim, so the $5,184 gap in payroll tax becomes $1,758 in total federal tax.
| W-2 employee | 1099 contractor | |
|---|---|---|
| Gross income | $80,000 | $80,000 |
| Employee payroll tax (FICA) | $6,120 | $0 |
| Self-employment tax | $0 | $11,304 |
| Half-SE-tax deduction | $0 | - $5,652 |
| § 199A deduction | $0 | - $11,650 |
| Taxable income | $63,900 | $46,598 |
| Federal income tax | $8,770 | $5,344 |
| Total federal tax | $14,890 | $16,648 |
| Take-home after federal tax | $65,110 | $63,352 |
| Effective federal rate | 18.6% | 20.8% |
Single filer, standard deduction, no business expenses, no state tax. The calculator above opens on the 1099 column; change its figures to run your own.
On this page
Payroll tax on both sides
An employee pays 6.2% Social Security and 1.45% Medicare on wages, withheld from every paycheck (26 U.S.C. § 3101). The employer pays the same again on top of the salary (§ 3111): $6,120 on $80,000, a cost of the job that never appears on the pay stub.
A contractor pays both halves, 12.4% and 2.9%, as self-employment tax. Two adjustments stand in for the employer. The tax is charged on 92.35% of profit rather than all of it (§ 1402(a)(12)), and half of it is deducted from income (§ 164(f)), much as an employer's share never counts as an employee's income.
Is a 1099 or W-2 job better?
On federal tax alone, the two are close at the same pay. An employee on $80,000 keeps $65,110 after federal tax. A contractor with no expenses needs $82,285 of revenue to keep the same, 2.9% more.
The bigger differences sit outside the tax. An employer usually adds benefits, such as health insurance, a retirement match and paid leave. A contractor pays for their own, and can deduct the costs of doing the work. Set a contract rate against the salary plus what those benefits are worth to you, then estimate your own 1099 tax with your real expenses.
Expenses: a deduction employees no longer get
Employees cannot deduct unreimbursed work costs. The 2017 tax law suspended miscellaneous itemized deductions, and Pub. L. 119-21 made that permanent (26 U.S.C. § 67(g)). A contractor deducts business costs on Schedule C before either tax is worked out: at $80,000, $5,000 of expenses would cut the contractor's federal tax by $1,152.
Who decides whether you are a contractor
Not the label on the contract. The IRS weighs the whole relationship under three headings: behavioral control, financial control and the type of relationship (IRS, Independent contractor or employee). Either side can ask the IRS to decide on Form SS-8, and the IRS warns that a determination may take at least six months.
Frequently asked questions
Do employers pay taxes on 1099 contractors?
No payroll tax. A business pays no Social Security or Medicare on what it pays a contractor and withholds nothing; it files Form 1099-NEC once the year's payments reach $2,000 (26 U.S.C. § 6041(a)). The contractor pays both halves as self-employment tax.
Why does the contractor get a § 199A deduction and the employee does not?
Section 199A allows up to 20% of qualified business income from a trade or business, and it says plainly that performing services as an employee is not one (26 U.S.C. § 199A(d)(1)(B)). Wages never qualify. The table assumes the contractor pays no wages and holds no equipment, which only matters above the § 199A threshold.
Can I have a W-2 job and 1099 income in the same year?
Yes, on one return. Your wages use up the Social Security wage base first, so less of your 1099 profit is taxed at 12.4%. Switch on "I also have W-2 income this year" in the calculator above to include them.