1099 vs. W2 Pay Calculator

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Wondering whether you’d take home more of your income as a 1099 worker or W-2 employee? If so, then one of the following scenarios might apply to you:

• You’re debating whether to look for full-time work or go freelance
• You’ve started consulting on the side of your day job and want to know how much you should charge to keep pace with your salary
• You’re considering switching from W-2 to 1099 work — or vice versa
• You’re self-employed and want to check your current rates against a W-2 salary

Whatever the reason, you came to the right place. Based on factors like your location, tax filing status, and how much you work per week, this calculator will let you know how much of your paycheck you’d keep as a 1099 vs. W-2 worker — and how much you’ll pay in taxes.

How to use Keeper’s 1099 vs. W-2 pay calculator

To illustrate how the calculator works, we’ll fill out the prompts using an example of Naomi, a self-employed therapist living in Colorado.

Naomi got a W-2 job offer from a community center in Denver and wants to figure out whether she’ll keep more of her income if she accepts the job offer or continues in private practice.

Let’s get started.

Step #1. Select your home state

Each state has its own income tax rules. Whether you’re a 1099 or W-2 worker, where you live affects the amount of tax you pay.

Like the federal government, some states use a progressive tax system where your income tax rate is based on your annual earnings. Others have a flat tax system where everyone pays the same rate, no matter how much they earn.

Some states don’t charge income tax at all, including: 

• Alaska
• Florida
• Nevada
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

In our example, Naomi lives in Colorado, which has a flat income tax rate of 4.4%.

Step #2. Pick your tax filing status

Next, you’ll select your tax filing status.

As a single filer

If you choose “Single,” or “Head of household,”  you’ll file your tax return on your own. So you’ll only have to enter your own 1099 hourly rate and W-2 income in the calculator.

As a joint filer

If you choose “Married filing jointly,” you and your spouse will file one tax return together. The calculator will prompt you to enter your own 1099 hourly rate and W-2 income, plus your spouse’s total income — whether it’s 1099, W-2, or a combination of both.

(Keep in mind: Even if you get married on December 31, you can still file a joint return for that tax year. And if you’re divorced, any of the filing statuses might make sense depending on your situation.)

In our example, Naomi is a single filer.

Step #3. Enter your annual W-2 income

It’s time to get into the meat and potatoes of the 1099 vs. W-2 calculator: income.

If you’re already a W-2 employee, what’s your annual salary? If you’re not, what do you expect your salary to be? Enter this number in the third box of the calculator.

Finding a reasonable W-2 salary

If you don’t already have a number in mind, you can use these resources to get an idea of your profession’s average income:

• Simply Hired
• Glassdoor
• ZipRecruiter

Naomi’s job offer comes with an annual salary of $60,000 per year — in line with what W-2 therapists earn on average in Colorado.

Step #4. Put in your hourly 1099 rate

If you’re an experienced freelancer and already have an hourly rate nailed down, plug it here.

If you’re a newer self-employed worker or just want to revisit your current rates, you have a few options:

• Use Keeper’s 1099 hourly rate calculator, which will help you determine a rate that takes into account factors like paid time off and the cost of health insurance
• Search for professional associations in your industry that provide hourly rate estimates. (For instance, the Editorial Freelancers Association lists average hourly rates for writers and editors)

Try out different rates and see how your results change.

Naomi currently makes $55 an hour in her private teletherapy practice, so that’s what she’ll add to box four.

Step #5. Add your daily work hours

This should be a fairly straightforward question to answer: How many hours will you be working per week? Add the answer to box five.

Only enter paid hours

For this box, just enter your paid daily work hours. But remember: Freelancing and unpaid work hours are birds of a feather — sadly, they often go together. Self-employment comes with time spent on unpaid tasks, like:

• Communicating with clients
• Advertising your services
• Ordering work supplies

Naomi works six paid hours a day. For the purposes of this calculator, she doesn’t enter the extra hours she spends charting, maintaining her website, and keeping up with the latest mental health research.

Step #6. Fill in your weekly workdays

How many days a week will you work on average? Put that number here.

For Naomi, this answer is five.

Step #7. Tally up your annual vacation days

How many paid days off do you have (or do you intend to take)?

Remember to include not only vacation but also federal holidays. While these are built into many W-2 employment packages, freelancers often overlook them — but they’re important for maintaining a healthy work-life balance!

Naomi’s W-2 job offer comes with two weeks of vacation and five holidays, amounting to 15 paid days off. She takes the same amount of time off as a freelancer, so that’s what she’ll add to the last box.

Step #8. Compare your W-2 vs. 1099 results

Voilà! Time to compare whether you’d take home more of your income as a W-2 employee or 1099 freelancer. 

Your results will take into account:

• W-2 payroll taxes vs. 1099 self-employment taxes
• How much you’ll owe for federal income taxes
• Your state income tax bill

Let’s take a look at Naomi’s results. 

In the end, Naomi takes home $13,509.95 more doing 1099 work than W-2 work. 

Step #9. Consider the tax write-offs you can take

When Keeper’s calculator compares how much of your pay will go towards taxes as a W-2 or 1099 worker, the 1099 income it shows you is your gross income. It doesn’t account for tax write-offs — which can substantially lower the amount you pay in taxes. 

Let’s take a step back. When you’re self-employed, you can write off the cost of eligible business expenses: deducting them from your gross income to lower how much you owe the IRS. 

Naomi’s gross income from teletherapy might be $80,850, for example. But say she spends $20,000 a year to keep her practice running. If she keeps track of all those write-offs, she’ll only be taxed on $60,850.

How to keep more of your 1099 income with write-offs

One of the best ways to save money with tax write-offs is by relying on an expense-tracking app like Keeper. The app connects to your bank account, making it easy to record each time you pay for a business expense. 

For Naomi, those expenses might include:

• 🗓️ Appointment scheduling software
• 📔 Workbooks and journals
• 🖥️ Hosting fees for her website
• 📚 Her subscription to the American Journal of Community Psychology
• 🌐 Part of her bill for the lightning-fast internet connection she uses to chat with clients
• 🏠 Part of her rent, since she works from a home office

The average self-employed person who uses Keeper to track tax deductions saves $1,249 a year.

At tax time, you can file right in the Keeper app, and it’ll fill out your Schedule C with all of your write-offs. If you want to file your independently — or hand it over to your accountant — you can download a list of your expenses.

1099 vs. W-2 taxes and take-home pay

The 1099 vs. W-2 pay calculator figures out your results by subtracting the taxes you’ll owe from your annual income. When it comes to your income taxes, it automatically accounts for the standard deduction.

Here’s how the calculator determines the taxes you pay in each scenario:

What do the calculator results mean?

This calculator doesn’t just give you the tax bill you can expect in April. Instead, it accounts for all the tax you pay throughout the year. Note that you’d pay them differently in the W-2 and 1099 scenarios:

• With W-2 work: Your taxes are automatically taken out of your paycheck through employer withholding
• With 1099 work: You pay your taxes on your own — possibly on a quarterly basis

The difference in payment method can make 1099 taxes feel a lot more painful than W-2 taxes. As a self-employed worker, you’re actively making those payments yourself, instead of passively getting them skimmed off your paychecks — before the money hits your bank account, even. But you are still paying taxes either way. 

That’s why this calculator will never report a negative number for the taxes you owe, even if you typically get refunds while doing W-2 work. A refund, after all, means that employer withholding caused you to overpay during the year.

What’s the difference between payroll tax and self-employment tax?

Payroll taxes and self-employment tax are how W-2 and 1099 workers, respectively, pay FICA tax. FICA (which stands for "Federal Insurance Contributions Act") is made up of Social Security and Medicare taxes.

Those with an eye for numbers might’ve noticed that the self-employment tax rate is exactly double the payroll tax rate. That’s because FICA tax is typically paid in two parts — one by the employee, and one by the employer.

1099 workers pay both the employee and employer portions, whereas W-2 workers just pay the employee portion. (Luckily, freelancers can write off the employer portion on their income taxes.)

What else should you keep in mind?

To make it easier to use, the calculator offers an estimate of your tax bill. Your actual taxes will vary based on a number of factors, including:

• Whether you itemize
• How much your health insurance costs as an independent contractor
• Any benefits you’d get at your W-2 job

For instance, Naomi’s job offer comes with a 401(k) match and a continuing education stipend on top of a health plan. 

In addition there are other implications to consider if you’re choosing between 1099 and W-2 work. Traditional jobs come with more stability and the convenience of employer withholding.

On the other hand, the perks of freelancing include the flexibility to set your own schedule and choose your own clients. As a result, Naomi might decide that she’s not willing to sacrifice her autonomy, which lets her take mornings off to go hiking and specialize in the areas of therapy she’s most passionate about.

Ultimately, this salary vs. 1099 calculator gives you a sense of how much of your paycheck you get to pocket. That makes it a handy tool for freelancers, W-2 workers, and side hustlers who want to understand where their money goes — and how to make the most of it.