1099 vs W-2 — the payroll tax difference

The same money, received two ways. The gap is self-employment tax against employee FICA, plus the employer half that never appears on a payslip.

You enter	the same gross both ways, plus any deductible business expenses on the contractor side.
It compares	employee FICA against self-employment tax on 92.35% of net earnings, and shows the employer-side cost that never appears on a payslip.
You get	the payroll-tax gap between the two. It does not decide whether a role can be a contractor — that is a legal test, not a calculation.

A worked example

On $100,000, an employee pays $7,650 in FICA while a contractor pays about $14,130 in self-employment tax — roughly $6,500 more, which is the employer half that nobody was paying on their behalf.

Gross annual amount (USD)Deductible business expenses 1099 side only

$5,125.12

more payroll tax as a contractor

W-2: employee Social Security (6.2%): $5,580.00
W-2: employee Medicare (1.45%): $1,305.00
W-2: employee Additional Medicare (0.9% over $200k): $0.00
W-2: total from your paycheck: $6,885.00
What your employer also pays (not yours, but real cost): $6,885.00
1099: net earnings subject to SE tax (92.35%): $78,497.50
1099: Social Security portion (12.4%): $9,733.69
1099: Medicare portion (2.9%, uncapped): $2,276.43
1099: Additional Medicare (0.9% over $200k): $0.00
1099: self-employment tax total: $12,010.12
Half of SE tax, deductible against income tax: $6,005.06

The half-SE-tax line lowers your taxable income, not the payroll tax itself — it matters for the income-tax bill this tool does not compute.

An estimate, not a quote. The IRS produces the figure that actually applies to you — check there before you rely on a number. Payroll-tax mechanics only, on the same gross amount paid two ways.

What this deliberately leaves out

No federal or state income tax, and no QBI deduction — those depend on filing status, other income and deductions, and a bracket model here would be a guess dressed as a calculation. The payroll-tax gap above is the real, computable difference, and it is the one most people never see broken out. The $200,000 Additional Medicare threshold is the single-filer figure and is not adjusted for filing status here. This tool does not determine — and cannot tell you — whether a worker can lawfully be classified as a contractor; that is a legal test (IRS common-law factors, plus stricter state ABC tests in some states), and it compares take-home for a classification you have already been given. The Social Security wage base indexes every year; this uses the 2026 figure. Figures verified 2026-08-17.

Would you rather we handled it?The payroll-tax gap is only half the picture — payroll setup, quarterly estimates and deductions are the other half.

Talk to an accountant See what we do

What to do with this number: Use this to price a contract rate against a salary offer, not to decide employment status. Whether a role can be a contractor at all is a legal test the IRS and your state apply — we do not make that call, and neither should a calculator.

The figures behind this tool, with their sources and verification dates: the companion guide. When the statute or schedule changes, the guide and the tool move together.