Self-employment tax · QBI · 2026
1099 vs W-2 Calculator: Which Leaves More?
Compare the same income earned as a 1099 contractor and as a W-2 employee, including the 15.3% self-employment tax, the half-SE-tax deduction, the 20% QBI deduction, and the salary you would need to match your freelance take-home.
Freelance income
Federal onlyOn $100,000 of income, the W-2 route leaves −$1,545 more in your pocket.
| Line | 1099 | W-2 |
|---|---|---|
| Gross income | $100,000 | $100,000 |
| Business expenses | −$0 | — |
| Self-employment tax / FICA | −$14,130 | −$7,650 |
| Half of SE tax deduction | $7,065 deducted | — |
| QBI deduction (20%) | −$15,367 | — |
| Taxable income | $61,468 | $83,900 |
| Federal income tax | −$8,235 | −$13,170 |
| Total tax | −$22,365 | −$20,820 |
| Effective tax rate | 22.4% | 20.8% |
| Net take-home | $77,635 | $79,180 |
Federal only. State tax applies to both routes and largely cancels out, so it is left out of the comparison.
Why the same number pays differently
An employee and a contractor earning $100,000 do not end up with the same money. Two rules create the gap.
- Both halves of FICA. An employee pays 7.65% and the employer quietly pays another 7.65%. A sole proprietor pays the combined 15.3% as self-employment tax — but only on 92.35% of net profit, which accounts for that employer half.
- Deductions an employee never gets. Half of the self-employment tax is deductible, and the QBI deduction removes another 20% of business profit from taxable income. On $100,000 those two deductions cut about $4,935 off the federal income tax bill.
The net effect in the table below: at modest incomes contracting costs a little, and the gap widens as income rises, because the 2.9% Medicare half of SE tax has no wage cap.
1099 vs W-2 at common income levels
Single filer, no expenses, no retirement contributions, federal tax only.
| Income | SE tax | Federal tax | 1099 net | W-2 net | Difference | Matching salary |
|---|---|---|---|---|---|---|
| $50,000 | $7,065 | $2,667 | $40,268 | $42,355 | -$2,087 | $47,403 |
| $75,000 | $10,597 | $4,898 | $59,505 | $61,593 | -$2,087 | $72,033 |
| $100,000 | $14,130 | $8,235 | $77,635 | $79,180 | -$1,545 | $97,804 |
| $150,000 | $21,194 | $16,413 | $112,392 | $113,791 | -$1,399 | $147,954 |
| $200,000 | $28,234 | $25,196 | $146,569 | $148,927 | -$2,358 | $196,838 |
"Matching salary" is the W-2 gross that leaves the same cash in hand as the 1099 net.
When 1099 actually wins
- Your rate is higher. Contractors typically charge 25%–40% above the equivalent salary to cover the tax gap, unpaid time off, and benefits. At a 30% premium, contracting usually wins outright.
- You have real expenses. Every deductible dollar cuts income tax and self-employment tax at once. $10,000 of legitimate expenses saves roughly $2,500–$3,500 in total tax.
- You use a solo 401(k). Contribution limits are far higher than an employee 401(k) — up to $72,000 in 2026 across employee and employer contributions.
Related calculators
1099 vs W-2 FAQ
How much tax does a 1099 worker pay in 2026?
A 1099 sole proprietor pays self-employment tax of 15.3% on 92.35% of net profit — $14,130 on $100,000 of profit — plus federal income tax after the standard deduction, the half-SE-tax deduction, and the 20% QBI deduction. That is about $22,365 in total, or 22.4%.
Is 1099 better than W-2 for taxes?
For the same gross amount, usually not: at $100,000 a 1099 contractor keeps $77,635 against $79,180 for an employee, a difference of $1,545. Contracting wins when the 1099 rate is higher, which is why freelancers charge a premium — the calculator above shows the W-2 salary that matches your net.
What is the QBI deduction for self-employed workers?
The qualified business income deduction lets most sole proprietors deduct 20% of net business profit from federal taxable income, on top of the standard deduction. It phases out for specified service businesses — consulting, law, health, financial advice — above about $201,775 of taxable income for single filers or $403,550 for joint filers in 2026. This calculator applies the full 20%.
How much should a freelancer set aside for taxes?
Set aside 25%–30% of every payment. At $100,000 of 1099 income the total federal tax here is $22,365, or 22.4%. Because no employer withholds for you, quarterly estimated payments are due in April, June, September, and January.
Do 1099 workers get the same standard deduction?
Yes — the same $16,100 single / $32,200 joint standard deduction applies, after subtracting half of the self-employment tax and the QBI deduction.
What can a 1099 worker deduct that an employee cannot?
Business expenses reduce both income tax and self-employment tax: software, equipment, a home office, mileage at the IRS standard rate, health insurance premiums, and half of self-employment tax itself. An employee gets none of these, which is the main way contracting closes the gap.