Salary vs Contract Rate Calculator

About this calculator

Comparing a salaried (W-2) job to a 1099 contract rate is not as simple as comparing the two headline numbers, because a salary typically includes employer-paid benefits — health insurance, retirement matching, paid time off — while a contract rate does not, and a contractor also owes the full 15.3% self-employment tax (Social Security and Medicare) instead of splitting it with an employer.

Contractors also need to account for unpaid weeks between engagements, since a quoted hourly rate only pays out for hours actually billed, unlike a salary that continues through vacation and holidays. Freelancers and consultants use this kind of comparison when negotiating a contract rate, converting a target salary-equivalent income into the hourly rate that would actually replace it once these gaps and extra costs are priced in.

Enter your salary and the value of your benefits, then your proposed contract rate, expected unpaid weeks off, and self-employment overhead, and this calculator converts both paths into a directly comparable equivalent annual income.