W2 to 1099 Calculator
Free W2 to 1099 calculator. Enter your salary and see the 1099 rate you need to cover taxes, benefits and time off.
How this calculator works
Most "what salary do I need" calculators compare gross to gross. That math lies. Your W2 paycheck was only part of what your employer paid for you. This calculator starts with your real take-home, adds the benefits cost you now have to cover, layers in business expenses, then grosses the whole thing up by the higher 1099 effective tax rate.
What this tool gives you
- The 1099 revenue needed to match your current package
- Hourly, day, and monthly retainer equivalents
- A breakdown of what your W2 actually costs vs what you take home
- How much of your real compensation is hidden in taxes and benefits
Built for experienced corporate professionals
For senior professionals with 10–25 years of experience whose true market value is hidden by employer salary bands.
Worked example: from a $120,000 salary to a 1099 hourly rate
Here is one person, run through this calculator step by step. They earn a $120,000 salary. Their employer pays $8,000 a year for health insurance and a 4% 401(k) match ($4,800). They get 25 paid days off a year (15 vacation days and 10 holidays).
Step 1: Add up what the job was really worth
Your salary is only part of the deal. The employer also pays for benefits and half your Social Security and Medicare.
| Salary | $120,000 |
| Health insurance | $8,000 |
| 401(k) match (4%) | $4,800 |
| Employer's share of Social Security and Medicare (7.65%) | $9,180 |
| Benefits total (enter about 18% in the calculator) | $21,600 |
Step 2: Start from what you take home, then add what you now pay
The calculator starts with your take-home pay at a 25% tax rate. Then it adds the benefits you now cover yourself and your business costs.
| Take-home pay ($120,000 after 25% tax) | $90,000 |
| Benefits you now pay yourself | $21,600 |
| Software, insurance, accounting and equipment | $6,000 |
| Money you need to keep each year | $117,600 |
Step 3: Add taxes and a safety buffer
As a contractor, you pay about 32% in total tax, including both halves of Social Security and Medicare. The calculator also adds a 15% buffer. The 15% buffer covers slow months and unpaid gaps between clients.
| Revenue before the buffer (after 32% tax) | $172,941 |
| Revenue needed with 15% buffer | $198,882 |
Step 4: Count real billable hours
A contractor can't bill every hour. Time goes to finding clients, admin and time off. This person takes 25 days off, so they work 47 weeks. They bill 65% of a 40-hour week, or 26 hours.
| 47 weeks × 40 hours × 65% billable | 1,222 hours |
Step 5: Find the rate and compare
| $198,882 ÷ 1,222 hours | $162.75 an hour |
| Rounded up | about $165 an hour |
| Old W-2 pay ($120,000 ÷ 2,080 hours) | $57.69 an hour |
| To come out even, charge about | 2.8 times the old hourly pay |
Your numbers will be different. Enter your own salary and benefits in the calculator above to get your rate.
Why your 1099 rate must be higher than your W-2 pay
- You pay both halves of Social Security and Medicare. Your employer used to pay half. Now you pay the full 15.3%.
- No employer health insurance or retirement match. You buy your own coverage and fund your own retirement.
- No paid time off. Vacation days, holidays and sick days now earn nothing.
- Not every work hour is billable. Finding clients, sending invoices and admin take real time. Nobody pays you for it.
Common mistakes when setting your first 1099 rate
Dividing your old salary by 2,080 hours
This gives you your old hourly pay, not your new rate. It leaves out taxes, benefits, time off and unpaid hours. Charge this and you take a big pay cut without noticing.
Forgetting taxes and benefits
Your employer paid for health insurance, a retirement match and half your payroll tax. Now those costs are yours. Build them into your rate from day one.
Assuming you'll bill 40 hours every week
Most new contractors bill far less. Some weeks go to finding work or to time off. Plan on 20 to 30 billable hours a week, and you won't be caught short.
Frequently asked questions
How much more should I charge as a 1099 contractor than my W-2 pay?
In the worked example above, a $120,000 salary needs about $165 an hour. That is about 2.8 times the old hourly pay of $57.69. You need more because you now pay your own taxes and benefits, and you bill fewer hours. Enter your numbers in the calculator above to get your exact rate.
Do I pay more taxes as a 1099 contractor?
Usually, yes. You pay both halves of Social Security and Medicare, about 15.3% in total, on top of income tax. You can deduct real business costs, which helps lower what you owe.
How many billable hours should I plan for in a year?
A safe plan is about 1,000 to 1,400 billable hours a year. That is roughly 20 to 30 hours a week. The rest of your time goes to finding clients, admin and time off.
Should I charge hourly or by the project?
Hourly is simple when the work is hard to scope. Project pricing often pays better once you know how long the work takes. Either way, start from the hourly rate you need so a project price covers your costs.
What is the difference between W2 and 1099?
W2 means you are an employee. Your employer withholds taxes, pays half of payroll tax and usually covers benefits. 1099 means you are an independent contractor who pays all your own taxes and benefits.
Is this calculator free?
Yes, it is completely free. Enter your salary and the calculator shows the 1099 rate you need to match your current package.
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This is an estimate for planning, not tax advice. Talk to a tax professional about your situation.