1099 vs W-2: what hourly rate matches your salary?
A contractor needs a rate well above the W-2 hourly wage to take home the same money. For a $70,000 salary the comparison below gives $70.94 per hour, about 2.1 times the W-2 wage of $33.65.
Why the rate has to be higher
- Both halves of FICA: employees pay 7.65 percent; contractors pay 15.3 percent self-employment tax on 92.35 percent of profit.
- Unpaid time off: a salary includes paid vacation, holidays and sick days. A contractor bills none of them.
- Unbillable hours: pitching, admin and bookkeeping are unpaid.
- Expenses and benefits: software, equipment and insurance are on you, as are health insurance and retirement.
Rate that leaves the same take-home pay
At a $70,000 salary the contractor rate that leaves the same take-home pay is about $70.94, roughly 2.1 times the W-2 hourly wage.
Single filer, 2026. W-2 take-home pay is the salary minus federal income tax and employee FICA. The contractor rate uses the calculator’s default time off (33 days), 60% billable time and the default expenses of $4,400; state tax, health insurance and retirement are set to 0 on both sides.
| W-2 salary | W-2 hourly wage | Take-home per month | 1099 rate needed | Multiple |
|---|---|---|---|---|
| $50,000 | $24.04 | $3,530 | $52.25 | 2.2× |
| $70,000 | $33.65 | $4,840 | $70.94 | 2.1× |
| $90,000 | $43.27 | $6,012 | $88.29 | 2.0× |
| $120,000 | $57.69 | $7,771 | $116.07 | 2.0× |
Add health insurance, retirement and state tax and the gap widens further. Use the calculator with your own figures for a precise answer.
Rule of thumb versus the calculation
A common rule of thumb (salary × 1.35 ÷ 1,600 hours) gives $59.06 at $70,000; the calculation gives $48.46 when you assume 1,600 billable hours and $70.94 with the default time off and 60 percent billable.
Rules of thumb usually assume about 1,600 billable hours (77 percent of a 2,080-hour year). The table compares three ways to the same take-home pay, single filer, no state tax, no health insurance or retirement, default expenses of $4,400:
| W-2 salary | W-2 hourly wage | Rule of thumb (×1.35, 1,600 h) | Calculated at 1,600 billable hours | Calculated at default hours (1,093 h) |
|---|---|---|---|---|
| $50,000 | $24.04 | $42.19 | $35.70 | $52.25 |
| $70,000 | $33.65 | $59.06 | $48.46 | $70.94 |
| $90,000 | $43.27 | $75.94 | $60.31 | $88.29 |
| $120,000 | $57.69 | $101.25 | $79.29 | $116.07 |
The rule of thumb is close to the calculation when you really bill 1,600 hours. Most new contractors bill fewer, which is what pushes the rate towards the last column.
Benefits you replace yourself
As a contractor you replace every benefit a W-2 job includes, and each has to be priced into the rate.
- Employer half of FICA (7.65 percent), included in the self-employment tax.
- Health insurance premiums, often partly paid by employers.
- Retirement match such as a 401(k) match.
- Paid time off: vacation, holidays and sick days.
- Equipment, software and training that employers normally provide.
- Unemployment and workers’ compensation protection, which contractors generally do not receive.
How contractor income is reported
Clients that pay you $2,000 or more in a year for services (payments made in 2026 and later; it was $600 before) generally send a Form 1099-NEC. You must report all your freelance income whether or not you receive a form. Income and expenses go on Schedule C, and self-employment tax on Schedule SE. Unlike a W-2 employer, the client withholds nothing.
Frequently asked questions
What is the 1099 rate equivalent to a $100,000 salary?
Use the calculator: enter the take-home pay a $100,000 salary leaves you as your goal, add your own expenses and time off, and read the rate. For the default time off and 60 percent billable time it is usually more than double the W-2 hourly wage of about $48.
Do contractors really pay more tax than employees?
On the same income, yes, because contractors pay both halves of Social Security and Medicare. Half of the self-employment tax is deductible and the QBI deduction can offset part of it.