C2C vs W-2 Rate Calculator
Compare corp-to-corp (C2C) and W-2 agency contract rates for 2026, including S-corp payroll costs, insurance and admin overhead.
Comparing Corp-to-Corp (C2C) and W-2 Agency Contract Rates
Unlike the UK's umbrella-company model, the closest US equivalent for contractors weighing how to get paid is choosing between a W-2 agency arrangement and running your own S-corp or LLC to bill corp-to-corp (C2C). Most of what's written about this comparison online is a plain-language explainer with no real numbers attached — this calculator puts the 2026 tax math behind both options.
A W-2 agency arrangement is the simplest: the agency withholds federal income tax and your 7.65% FICA share, and pays the matching 7.65% employer share itself. Running C2C through your own entity means you're responsible for the equivalent employer-side costs yourself — plus, if you elect S-corp treatment, the added complexity of paying yourself a reasonable W-2 salary from the company and taking the remainder as a distribution, which changes how much self-employment-style tax you owe versus a straight 1099 arrangement.
What's different between the two paths
- A W-2 agency contract withholds 7.65% employee FICA (6.2% Social Security up to $184,500, 1.45% Medicare), with the agency covering the matching 7.65% employer share and any FUTA itself
- A C2C arrangement through your own S-corp or LLC makes you responsible for the equivalent employer-side payroll costs, plus the admin and insurance overhead of running an entity
- An S-corp C2C structure lets you split income between a reasonable salary (subject to standard payroll tax) and distributions (not subject to self-employment tax), which is the mechanism behind most of the tax savings often cited for this route
- Federal income tax applies under the same 2026 brackets regardless of which path you choose — the difference is entirely in FICA/self-employment tax treatment and overhead costs
