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Contractor rate calculator

Turn a W-2 salary into the equivalent 1099 contractor bill rate, and go the other way too. It adds back the self-employment tax a contractor carries, the benefits you self-fund, and the unpaid time between clients, all from cited 2026 IRS and SSA figures. Built for US contractors and the teams that hire them. The Bureau of Labor Statistics counted 11.9 million independent contractors in the US as of July 2023, 7.4% of total employment, so setting a rate that actually covers a contractor's costs is a question for millions of workers.

Last updated: 2026

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✓ Free tool ✓ No data stored ✓ Cited IRS and SSA figures

Convert salary and bill rate

Pick a direction, set your benefits load and utilization, and see the equivalent figure.

The gross salary you would earn (or pay) as a W-2 employee.

An assumption. As a 1099 contractor you fund your own health insurance and retirement, so this percentage of comp is added on top. 25% is a common starting point.

Your utilization assumption. 48 weeks leaves room for unpaid time off, holidays, and gaps between clients that a salaried employee does not carry.

Equivalent 1099 hourly bill rate

To match $100,000 of W-2 comp once you cover your own taxes, benefits, and unpaid time.

$69.09 / hour

About $143,704 a year at full-time hours.

Target comp$100,000
Extra self-employment tax burden$7,650
Benefits load$25,000
Grossed-up annual$132,650
Billable hours1,920 hours
Assumptions and cited 2026 figures

The benefits load and your utilization (billable weeks and hours) are assumptions you set above. The tax figures below are fixed:

  • Social Security wage base $184,500 (SSA 2026)
  • Social Security 6.2% each side, 12.4% combined (IRS Topic 751)
  • Medicare 1.45% each side, 2.9% combined, no cap (IRS Topic 751)
  • Additional Medicare 0.9% over $200k single / $250k married filing jointly (IRS Topic 560)
  • Self-employment tax 15.3% on 92.35% of net profit, up to the wage base (IRS self-employment tax)

This is an estimate for educational use, not tax advice. Your real numbers vary by filing status and state. Confirm with a CPA.

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This is an estimate, not tax advice

The figures here are educational estimates built on cited 2026 IRS and SSA numbers. They do not account for your filing status, state taxes, deductions, the qualified business income deduction, or your entity type, and a real situation varies on all of those. Confirm any number with a CPA before you set a rate or accept an offer.

Hiring abroad instead of in the US?

This tool models US self-employment tax for a US-based contractor. If you are budgeting for a contractor in another country, the market rate works differently, so use the cost to hire a contractor calculator for a country-by-country monthly estimate.

What goes into a 1099 bill rate

1

Self-employment tax

A W-2 employee splits FICA with their employer. A 1099 contractor pays both halves. Per the IRS, the self-employment tax rate is 15.3% (12.4% Social Security plus 2.9% Medicare) on 92.35% of net earnings, and the SSA sets the 2026 Social Security wage base at $184,500, so the 12.4% applies only up to that cap while Medicare has none. This tool adds back the employer half so your rate covers it.

2

Benefits you self-fund

No employer is buying your health insurance or matching your retirement, so you fund those yourself out of your rate. The calculator models this as a benefits load on top of comp, defaulted to 25%, which you can raise or lower to match your real costs.

3

Unpaid time and utilization

You only earn on the hours you bill. Holidays, unpaid time off, and gaps between clients mean fewer billable hours than a salaried year. Spreading your target across 48 weeks instead of 52 raises the hourly rate you need, which is why utilization matters as much as taxes.

4

Classify the worker correctly

The contractor route only holds if the worker genuinely meets the test for an independent contractor. Treating someone who should be an employee as a contractor is worker misclassification, which can mean back taxes and penalties. Check the engagement first if you are unsure.

Common questions

Why is a 1099 bill rate higher than a W-2 salary? +
A 1099 contractor covers costs a W-2 employer normally pays. As a contractor you owe the full 15.3% self-employment tax up to the $184,500 Social Security wage base, you fund your own health insurance and retirement, and you absorb unpaid time between clients. To net the same as a salaried employee, your bill rate has to gross those costs back up, which is why it lands well above the equivalent salary.
How does self-employment tax change the math? +
Per IRS guidance, the self-employment tax rate is 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare, charged on 92.35% of net self-employment earnings. A W-2 employee splits FICA with their employer at 6.2% Social Security and 1.45% Medicare each, but a 1099 contractor pays both halves. The SSA sets the 2026 Social Security wage base at $184,500, so the 12.4% applies only up to that cap while the 2.9% Medicare portion has no cap. This calculator adds back the employer half (6.2% capped plus 1.45% uncapped) as the extra burden a contractor must be made whole for.
What is the benefits load and why does it matter? +
The benefits load is the share of comp you set aside to self-fund the things a W-2 employer would otherwise provide, mainly health insurance and retirement contributions. The calculator defaults to 25%, which is a common starting point, but it is an assumption you can change. A higher load raises the bill rate needed to match a given salary.
What does utilization mean here? +
Utilization is how many of the year's hours you actually bill. A salaried employee is paid for roughly 52 weeks, but a contractor loses time to holidays, unpaid time off, and gaps between clients. The tool defaults to 48 billable weeks at 40 hours, or 1,920 billable hours, and spreads your grossed-up annual target across only those hours, which raises the hourly rate.
Is this tax advice? +
No. This is an educational estimate built on cited 2026 IRS and SSA figures. It does not account for your filing status, state taxes, deductions, the qualified business income deduction, or your entity type. Confirm any figure with a CPA before you set a rate or accept an offer.

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