US contractor guide
W-2 versus 1099: what changes for take-home pay?
A 1099 contract rate is not directly comparable with a W-2 salary. Independent contractors normally pay their own business costs, arrange benefits and pay self-employment tax.
In short
Compare the whole package: net business profit, payroll taxes, health cover, retirement saving, paid leave and the risk of unpaid time—not just the headline rate.
Payroll tax is structured differently
Employees generally see Social Security and Medicare withheld as FICA. Contractors generally calculate self-employment tax on net profit, which is revenue less ordinary and necessary business expenses. The self-employment calculation uses 92.35% of net earnings and includes both Social Security and Medicare components.
Expenses reduce profit, not necessarily the workload
Equipment, software, insurance, accounting, marketing and a home office can be business costs. They can reduce taxable profit where eligible, but you still need the cash to pay them.
Benefits have a value
Employer health cover, paid holidays, sick leave, retirement match and unemployment protection can be significant. Add their annual value before deciding whether a contract premium is enough.
Worker status is not a preference
Whether someone is an employee or contractor depends on the actual working relationship and applicable law. A calculator cannot determine classification.
Try the W-2 vs 1099 calculator. See IRS Topic no. 554 for self-employment tax and the IRS's employee-versus-contractor guidance.