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$100k W-2 vs 1099: What You Actually Keep (2026)

5 min readUpdated Sep 2026

$100,000 on a W-2 and $100,000 on a 1099 are not the same money. In Texas, the W-2 offer below leaves $75,280 to spend plus $16,000 of retirement money and health cover. The same $100,000 billed as a contractor leaves $69,617 after tax, expenses and health insurance.

To match the W-2 package, the contract needs about $71/hour in Texas and $72/hour in California for 40 billable hours a week over 46 weeks. Every figure on this page comes from the same 2026 model as the Offer Decision Tool, so you can rerun it with your own numbers.

Free calculatorOffer Decision Tool (W-2 vs 1099)

The assumptions

  • Single filer, standard deduction, 2026 federal brackets.
  • W-2: $100,000 salary, employer pays $7,000 of health premiums, you put 5% in a 401(k) and the employer matches 4%.
  • 1099: $100,000 gross over 1,840 billable hours (40 hours × 46 weeks, so unpaid holidays and leave are priced in), $3,000 of business expenses and $7,200 of health insurance you buy yourself.
  • The contractor pays both halves of Social Security and Medicare, deducts half of it and the health insurance, and takes the 20% QBI deduction.

Texas (no state income tax)

  • W-2: federal income tax $12,070, Social Security and Medicare $7,650, cash to spend $75,280, total value with 401(k) and health cover $91,280.
  • 1099 at $100,000: federal income tax $6,477, self-employment tax $13,706, cash to spend after expenses and insurance $69,617.
  • Gap: $21,663 a year in favour of the W-2 offer. Break-even contract rate: $71/hour.

California

  • W-2: total tax $25,610 (including $5,890 state tax and SDI), cash to spend $69,390, total value $85,390.
  • 1099 at $100,000: total tax $24,322 (including $4,139 state), cash to spend $65,478.
  • Break-even contract rate: $72/hour.

How to convert your own W-2 salary into a 1099 rate

  • Add up the whole W-2 package: salary, bonus, employer health contribution and retirement match.
  • Estimate billable hours honestly — most contractors bill 1,500–1,850 hours, not 2,080.
  • Include the costs an employer used to carry: the employer half of payroll tax, health insurance, equipment and software.
  • Run both offers through the Offer Decision Tool; it solves for the break-even hourly rate directly.

Frequently asked questions

Is $100k on a 1099 the same as $100k on a W-2?
No. In this example the W-2 package is worth $21,663 more in Texas, because the contractor pays the employer's half of payroll tax, buys health insurance and has no retirement match.
What hourly rate equals a $100k salary as a contractor?
About $71/hour in Texas and $72/hour in California for 1,840 billable hours with the assumptions above. Fewer billable hours or richer benefits push it higher.
Can the QBI deduction close the gap?
It helps: the contractor here deducts 20% of qualified business income (limited to 20% of taxable income). It still does not make up for payroll tax, insurance and unpaid time off at the same gross.

Primary sources

Links checked Sep 24, 2026

  1. IRSTax inflation adjustments for tax year 20262026 brackets and standard deduction
  2. IRSSelf-employment tax (Social Security and Medicare taxes)15.3% SE tax on 92.35% of net earnings
  3. IRSTopic 751 — Social Security and Medicare withholding ratesEmployee vs employer FICA share
  4. IRSRev. Proc. 2025-32 — 2026 inflation-adjusted amounts2026 QBI threshold $201,750 / $403,500 and phase-in range
  5. IRSQuestions and answers for the Additional Medicare Tax0.9% over $200,000 single / $250,000 joint
  6. IRSQualified business income deduction

Rules change. Where our summary and the authority differ, the authority wins. See how every figure is sourced on the sources & methodology page.

This guide is general educational information, not tax, legal, banking, or accounting advice. Rules, fees, and provider policies change frequently and depend on your facts. Verify with the relevant authority or a qualified adviser before acting. See our full disclaimer.