Tax year 2026
Contractor or employee?
Compare what you keep as a 1099 contractor with what you keep on a salary, and see how much a contract needs to pay to match.
The contract leaves you $4,727 more a year. To match the $90,000 salary you would need to bill about $102,775.
| For the year | Employee | Contractor |
|---|---|---|
| Pay | $90,000 | $110,000 |
| Business expenses | $0 | $6,000 |
| Social Security and Medicare | $6,885 | $14,695 |
| Federal income tax | $10,970 | $12,434 |
| State and local tax | $0 | $0 |
| Take-home pay | $72,145 | $76,872 |
Contractors pay both halves of Social Security and Medicare (15.3% on 92.35% of profit) and get no employer benefits, paid leave or unemployment cover, so a contract usually needs to pay well above a salary to come out even. The 20% qualified business income deduction is not included, so the contractor figure may be a little low.
Estimate for tax year 2026. Your real paycheck depends on your W-4, your benefits and your employer's payroll system. This is education, not tax, payroll or financial advice.
Why the same pay is worth less as a contractor
An employee pays 7.65% of pay for Social Security and Medicare, and the employer pays the same again. A contractor pays both halves, as self-employment tax: 15.3% on 92.35% of profit. Half of that is then deductible from income.
Contractors also pay for their own health insurance, retirement savings, time off and equipment, and get no unemployment insurance. Business expenses come off before tax. And no tax is withheld: contractors pay estimated tax every quarter.
The 20% deduction for qualified business income, which many contractors can claim, is not included, so the contractor figure here is on the cautious side.
Questions
How much more should a contract pay than a salary?
The calculator shows the contract income that gives the same take-home pay. To also cover benefits, unpaid time off and gaps between contracts, many people look for considerably more than that.
What is self-employment tax?
Social Security and Medicare for people who work for themselves: 12.4% plus 2.9% on 92.35% of profit, with the Social Security part stopping at the yearly wage limit.