Why $100K W-2 does not equal $100K of 1099 revenue

A $100,000 W-2 salary and $100,000 of contractor revenue are not financially equivalent. Employees split Social Security and Medicare payroll taxes with the employer, while a self-employed contractor generally carries the self-employment-tax burden within the business result. Contractors can also face costs for insurance, software, equipment and non-billable time.

The calculator starts from the W-2 take-home estimate and solves for the contractor gross that produces approximately the same modeled net amount. Because state taxes are part of that comparison, change the state selector to your actual state before treating the result as a negotiation reference.

Test the offer instead of relying on a 30% rule

Rules of thumb such as adding 20%, 30% or 50% to salary can be useful for rough screening, but the required premium is not fixed. Federal brackets, state rules, deductible contractor costs, health-insurance assumptions and the number of billable hours all change the result.

Enter the actual 1099 offer and compare its modeled take-home with the $100K W-2 baseline. If the offer is below break-even, the counter-offer output shows the approximate annual and hourly amount needed to close the modeled gap. If it is above break-even, the remaining premium can be evaluated against benefits and contract risk.

Hourly rate depends on how many hours you can truly bill

A salaried employee may be paid through holidays, training, meetings and administrative time. A contractor may not be able to invoice all of those hours. That is why the page converts the annual break-even target using your chosen billable-hours assumption rather than assuming every work hour produces revenue.

Test 2,000, 1,800 and 1,500 hours to see the effect. The output is an estimate for planning and offer comparison, not tax preparation or a guarantee of market pricing.