Why this comparison matters
1
Compare the actual net dollars
Gross income can look similar, but the tax burden and benefit structure often differ materially.
2
Account for payroll tax
1099 work usually includes the full self-employment tax burden, while W-2 jobs split payroll taxes.
3
Estimate benefits and costs
Contract work often adds costs for benefits, retirement, and business expenses that a paycheck may hide.
4
Use it for negotiation
Seeing the net difference helps you price projects or compare a W-2 offer against independent work.
Worked example
| Line item | Amount |
|---|---|
| 1099 income | $120,000 |
| Business expense estimate | ($36,000) |
| Self-employment tax | ($17,000) |
| Estimated 1099 take-home | $67,000 |
| W-2 take-home at same salary | $104,000 |