1099 vs W-2 Cost Calculator
See the real 2026 cost gap between hiring a 1099 contractor and a W-2 employee — employer FICA, FUTA and benefits vs. contractor take-home, side by side.
Comparing the True Cost of a 1099 Contractor vs a W-2 Employee
When a business weighs hiring a 1099 contractor against bringing someone on as a W-2 employee, the sticker-price hourly rate rarely tells the whole story. This calculator adds back the costs a W-2 hire triggers that a 1099 engagement does not — and shows what a contractor actually needs to charge to end up in the same place after covering their own tax bill, for the 2026 tax year.
On the employer side, a W-2 hire adds the employer's 6.2% Social Security match (up to the $184,500 wage base) and 1.45% Medicare match, plus Federal Unemployment Tax (FUTA) at 0.6% on the first $7,000 of wages once the maximum state credit applies — all before benefits, insurance, or state unemployment tax (SUTA), which this federal-only tool does not model. A 1099 contractor bears none of that employer-side cost, but pays for it themselves through the 15.3% self-employment tax that stands in for both halves of Social Security and Medicare.
What this calculator accounts for
- Employer-side Social Security (6.2%) and Medicare (1.45%) matching on a W-2 wage, capped at the $184,500 Social Security wage base for 2026
- Employer FUTA at 0.6% on the first $7,000 of wages — the net federal rate once a business qualifies for the maximum state unemployment tax credit
- The contractor's own 15.3% self-employment tax (Social Security plus Medicare) on 1099 net income up to the same $184,500 wage base, dropping to a 2.9% Medicare-only rate above it
- Federal income tax on both sides using the same 2026 bracket schedule, since neither classification changes the income-tax brackets that apply
