A 1099 contract rate is not your paycheck. Self-employment tax takes a bite before you see a dollar of it, and federal and state income tax take their own cut on top. This calculator walks gross 1099 income through all three layers for an honest annual and monthly take-home number — then runs the same gross as a W-2 salary, so you can see, in dollars, what going 1099 actually costs you.
How it works
The calculator subtracts deductible business expenses from gross income to get net profit — the Schedule C figure. Net profit runs through the same self-employment tax formula as the Self-Employment Tax Calculator: 92.35% of net profit taxed at 12.4% for Social Security (capped at the annual wage base) plus 2.9% for Medicare (uncapped). In a loss year, net profit floors at $0, so no self-employment tax applies; take-home can still go negative from the cash you spent, though the tax layers compute to zero.
Then it applies a real Schedule 1 mechanic: half of that self-employment tax is deductible before federal and state income tax is calculated. So the taxable base for your federal and state rates is net profit minus half of self-employment tax, not net profit itself. Total tax is self-employment tax plus federal tax plus state tax, applied to that taxable base. Net take-home pay is gross income minus business expenses minus total tax, and monthly take-home is that annual figure divided by 12.
Alongside that, the calculator runs a second, W-2-equivalent scenario on the same gross income and the same federal/state rates — what would this gross be worth as a salary? As a W-2 wage, that gross loses employee-side FICA instead (6.2% Social Security up to the wage base, plus 1.45% Medicare, uncapped) but skips every 1099-side deduction — no business expenses, no self-employment tax, no half-SE write-off — since none apply to a paycheck. Federal and state rates apply straight to the full gross. The gap between the two results, takeHomeDifference, is the closest thing this tool has to "the cost of going 1099" at an identical gross. For the breakeven-rate framing of the same question, see the 1099 vs. W-2 Calculator.
Worked example
Say you bill $90,000 in 1099 income for the year, with $10,000 in deductible business expenses, a 22% federal rate, and a 5% state rate.
- Net profit: $90,000 − $10,000 = $80,000
- Self-employment tax on that profit: $11,303.64
- Half of self-employment tax (deductible): $5,651.82
- Taxable base for income tax: $80,000 − $5,651.82 = $74,348.18
- Federal tax: 22% of $74,348.18 = $16,356.60; state tax: 5% of $74,348.18 = $3,717.41
- Total tax: $11,303.64 + $16,356.60 + $3,717.41 = $31,377.65
- Net take-home pay: $90,000 − $10,000 − $31,377.65 = $48,622.35 (monthly: $4,051.86)
Now the same $90,000 gross as a W-2 salary, same rates:
- Employee FICA (6.2% Social Security + 1.45% Medicare): $6,885
- Federal tax: 22% of $90,000 = $19,800; state tax: 5% of $90,000 = $4,500
- W-2-equivalent take-home: $90,000 − $6,885 − $19,800 − $4,500 = $58,815
- Take-home difference: $58,815 − $48,622.35 = $10,192.65 more for the W-2 version, at the same gross.
How to interpret your result
Net take-home pay is the number to budget against — what actually lands in your account after self-employment tax and the income tax you told the calculator to apply. Effective tax rate shows the tax drag on gross income as a summary percentage, not a bracket, and typically sits below your top federal bracket.
Take-home difference answers the real question behind a 1099 offer: is the rate worth it? 1099 income pays both halves of FICA through self-employment tax, and comes with none of the benefits — health insurance, a retirement match, paid time off — often bundled into a W-2 salary, so a 1099 rate usually needs to run meaningfully higher just to match it in cash. This isolates only the FICA and income-tax math; it does not price in benefits, so treat a positive difference as a floor on how much more your 1099 rate should pay, not the whole story.
This is a planning estimate, not a return. Neither side computes real tax brackets — both apply whatever flat rate you enter to their own base. Neither models the Qualified Business Income (QBI) deduction, which can shelter up to 20% of qualified business income from federal tax for many 1099 filers and would narrow the gap shown here, nor the Additional Medicare Tax (0.9% on income above $200,000, which applies equally to both sides here), nor state-specific rules like local income tax or state surtaxes.
Methodology & sources
Self-employment tax follows IRS Schedule SE mechanics: net profit × 92.35% is the taxable base, taxed at 12.4% for Social Security (capped at the annual wage base) plus 2.9% for Medicare (uncapped), with half deductible on Schedule 1 before federal and state rates apply to the rest. The W-2-equivalent side applies employee-side FICA (IRC §3101) directly to gross income instead — 6.2% Social Security capped at the same wage base, plus 1.45% Medicare, uncapped — with federal and state rates applied to that full gross, since no business-expense or SE-tax deductions exist for a paycheck. See the IRS's Self-Employment Tax (Social Security and Medicare Taxes) page for the underlying rules and current-year Social Security wage base this calculator implements.
This tool covers US federal self-employment and FICA rules only and is not personalized tax advice — use it to sanity-check a rate or compare a 1099 offer against a W-2 one, and confirm with a tax professional before relying on the exact numbers.