Contractor to Salary Calculator
Convert a W-2 salary into a fair 1099 contract rate, or turn a contract rate back into an equivalent salary.
Choose the direction you want to convert
Hours you can actually bill clients
Employer FICA, health, PTO, 401k, overhead
How the 1099 vs W-2 Calculation Works
Comparing a salaried job to contract work is rarely as simple as matching the headline numbers. A W-2 employee receives a paycheck after the employer has already paid for a long list of hidden costs: the employer half of Social Security and Medicare (about 7.65%), health insurance premiums, a retirement match, paid vacation and sick days, equipment, software, and a share of general overhead. When you go independent as a 1099 contractor, every one of those costs lands on you. That is why this calculator centers on a single number, the benefits and employer load percentage, which bundles those costs into one adjustable figure.
In the salary-to-rate direction, the tool multiplies the W-2 salary by one plus your load, then divides by the hours you can actually bill in a year. The result is a recommended 1099 hourly rate that should leave you no worse off than you were as an employee. It also shows a minimum rate (the salary divided by billable hours, with no load), so you can see exactly how much of your rate is there just to replace lost benefits and cover the extra self-employment tax. Running the numbers the other way converts a quoted hourly rate back into the W-2 salary it really matches.
Why Contract Rates Run 25% to 40% Higher
The single biggest reason a contract rate exceeds the equivalent W-2 hourly wage is self-employment tax. Employees and employers split FICA, with each side paying 7.65%. As a sole proprietor or single-member LLC you pay both halves, so roughly an extra 7.65% comes straight off the top before you have bought any benefits. On its own, that pushes a fair rate noticeably above your old hourly pay.
On top of the tax difference, contractors buy their own health insurance (often several hundred dollars a month without an employer subsidy), fund their own retirement with no company match, and earn nothing during vacation, holidays, or sick days. Equipment, software licenses, accounting help, and business insurance all come out of your rate as well. Stack those items together and the gap between a W-2 wage and a sustainable 1099 rate typically lands somewhere between 25% and 40%, which is why a 30% default load is a sensible middle-ground starting point for most US workers.
How to Read Your Results
When converting a salary to a rate, the headline figure is your recommended 1099 hourly rate, the number you should quote to break even with your old job once benefits and taxes are covered. The minimum rate row strips the load away so you can see your absolute floor, the W-2 base hourly row shows your old salary spread over a standard 2,080-hour year, and the annualized row confirms what your recommended rate adds up to across your billable hours.
When converting a rate to a salary, the headline equivalent salary tells you which staff job would put you in a comparable spot. The gross contract income row shows your total invoiced revenue, and the deducted row shows how much of that revenue is eaten by benefits and the extra tax burden. If your equivalent salary looks lower than expected, raise your rate or trim your assumed load. For a fuller picture of take-home pay and self-employment costs, use these results alongside the related calculators below.
Where the 1099 Premium Comes From: a $100,000 Example
This is what a $100,000 W-2 job actually costs you to replace as a contractor. Each line is a cost your employer used to absorb, expressed as a share of salary. Together they build the benefits and employer load that lifts a fair contract rate above your old hourly wage.
| What You Now Cover Yourself | Annual Cost | % of Salary |
|---|---|---|
| Extra self-employment tax (employer half of FICA) | $7,650 | 7.7% |
| Health insurance (no employer subsidy) | $7,200 | 7.2% |
| Lost 401(k) match (4%) | $4,000 | 4.0% |
| Unpaid time off (3 weeks plus holidays) | $6,000 | 6.0% |
| Equipment, software, accounting, insurance | $3,150 | 3.2% |
| Total benefits and employer load | $28,000 | 28% |
With a 28% load, a $100,000 salary needs about $128,000 in gross contract income. Spread over 1,800 billable hours, that is roughly $71 per hour, versus a $48 W-2 base hourly rate.
Fair 1099 Rate by Salary
Recommended contract rates at a 30% load and 1,800 billable hours per year. The W-2 base hourly column divides salary by 2,080 hours, so the gap reflects both the load and the smaller number of hours a contractor can actually bill.
| W-2 Salary | W-2 Base Hourly | Fair 1099 Rate |
|---|---|---|
| $60,000 | $28.85 | $43.33 |
| $80,000 | $38.46 | $57.78 |
| $100,000 | $48.08 | $72.22 |
| $120,000 | $57.69 | $86.67 |
| $150,000 | $72.12 | $108.33 |