How the comparison works
Your yearly 1099 income is the hourly rate times billable hours per week times the weeks you actually work. Weeks matter more than most people expect: an employee is paid for 52 weeks including holidays and vacation, while a contractor is paid only for the weeks they bill. 48 weeks allows for about two weeks of vacation, a week of holidays and a week between contracts. The calculator then takes off the business expenses and health insurance an employer would normally cover, and the extra payroll tax a contractor pays.
The extra payroll tax
An employee pays 7.65% of wages for Social Security and Medicare and the employer pays another 7.65%. A self-employed person pays both halves as self-employment tax: 15.3% on 92.35% of net earnings. The Social Security part (12.4%) stops at the yearly wage base, $184,500 for 2026; the Medicare part (2.9%) has no cap. The calculator counts only the employer half as the extra cost of being a contractor, because an employee pays the other half too. Earnings above $200,000 also owe the 0.9% Additional Medicare Tax, which applies to employees and contractors alike and is left out here.
Going the other way
If you are weighing a contract against a job offer, type the salary into "W-2 salary to match". The calculator finds the hourly 1099 rate that leaves you with the same pay after the extra payroll tax and your costs, for the hours and weeks you entered. If the offer includes a retirement match, add the match to business expenses so it is counted on the contract side.
What this leaves out
Income tax is not included, because it comes out roughly the same either way: a contractor deducts half of the self-employment tax and all business expenses, and may qualify for the 20% qualified business income deduction. Unemployment insurance, workers' compensation and the value of employer-paid life or disability cover are not counted either, so treat the equivalent salary as an upper bound and check your own tax position with an accountant.