W-2 to 1099 Salary Converter
Transitioning from full-time employment to contracting? Calculate your required 1099 billing rate to avoid taking a hidden pay cut.
What should you charge as a contractor?
Compare your current employee compensation with the freelance revenue you would need to replace salary, benefits, retirement, paid time off, and business costs.
Your W-2 compensation & assumptions
Type in your exact numbers below to calculate your target rate.
Salary is only one part of employee compensation. Benefits, retirement matching, paid leave, and the additional costs of contracting all affect the rate you need.
Estimated contractor requirement
Target contractor hourly rate
This is your estimated financial break-even rate—not simply your W-2 salary divided by working hours.
Where the difference comes from
Contracting replaces more than a paycheck. These are the major financial components included in the estimate.
Estimated value of benefits you would give up.
Estimated additional employment-tax burden.
Software, equipment, insurance, accounting and more.
Estimated annual revenue required from freelance work.
Your negotiation floor
If a company wants you to leave a $100,000 W-2 position and become a contractor, compare the offer against this number—not just your current salary divided by 2,080 hours.
- Freelancers generally don't receive paid vacation or holidays.
- You may need to purchase your own health insurance and retirement benefits.
- Business expenses reduce your actual take-home income.
- Client hours are not necessarily the same as total hours worked.
- Actual tax liability varies by location and personal circumstances.
This calculator provides an estimate for planning and negotiation purposes. It is not tax, legal, accounting, or financial advice. Actual compensation and tax obligations vary by employer, location, business structure, deductions, and individual circumstances.
Essential Infrastructure for Independent Contractors
When transitioning to a 1099 status, you need to manage your own compliance, invoicing, and tax write-offs. Here is the recommended toolkit.
ZenBusiness
LLC Formation & Compliance
Form an LLC quickly to separate personal and business liabilities and write off self-employment taxes.
Deel
Contracting & Payroll
Onboard direct clients, generate compliant contractor agreements, and manage global invoicing.
FreshBooks
Accounting & Taxes
Track write-offs for home office, electronics, and software subscriptions to lower your tax liability.