W2 vs C2C/1099 Calculator — Compare Staffing Offers

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W2 Hourly Offer

W2 Hourly Base Pay

$ / hr

Health/Dental Benefits Value

$ / month

Estimated dollar value of health premiums covered by the employer.

Paid Time Off (PTO / Holidays)

Days / yr

Days paid where you do not have to work (vacation + national holidays).

Employer 401(k) Match 3%

Percentage of base salary the employer matches.

C2C / 1099 Hourly Offer

C2C / 1099 Hourly Base Pay

$ / hr

Estimated Business Expenses

$ / yr

Home office, laptop, travel, licenses, phone, internet, CPA, etc.

Tax Residence State

QBI Tax Deduction Eligible (20%)

Net Annual Financial Breakdown

Recruitment and Staffing Rule of Thumb: When switching from W2 to C2C/1099, you should target at least a 25% to 30% higher hourly rate to cover the self-employment tax burden, lost healthcare benefits, unpaid holidays/vacations, and operational expenses.

Guide: W2 Hourly vs. 1099/C2C Rate Comparison Math

How does unpaid time off (PTO) affect contractor rates?

Unpaid time off reduces the total annual billable hours for contractors, meaning they must bill at least 15% more per hour than a salaried W2 employee to earn the same annual wage.

On a W2 contract, if the agency offers 15 days of PTO (Paid Time Off), you get paid for 2,080 hours per year (40 hours/week * 52 weeks), regardless of your vacation days. On a 1099 or Corp-to-Corp contract, you only get paid for hours billed. If you take the same 15 days off (unpaid), you can only bill for 1,960 hours (2,080 - 120 hours). This calculator automatically reduces your C2C billing hours to match your W2 time-off setting, ensuring a completely fair comparison.

What is the difference between FICA and self-employment tax?

W2 employees pay only 7.65% FICA tax (employer pays matching 7.65%), while self-employed contractors must pay the full 15.3% Self-Employment (SE) tax themselves.

1099 / C2C contractors must pay both halves of this tax, known as the Self-Employment (SE) tax, which totals 15.3% on up to 92.35% of their net business income. However, they can deduct half of this SE tax from their adjusted gross income for federal income tax calculations.

How does the QBI deduction benefit C2C contractors?

The Qualified Business Income (QBI) deduction allows pass-through business entities to deduct up to 20% of their net business income from federal income taxes, lowering their effective tax rate.

Introduced under the Tax Cuts and Jobs Act, the QBI deduction allows pass-through business entities (such as single-member LLCs, S-Corporations, and sole proprietorships common in C2C work) to deduct up to 20% of their net business income from federal income tax. This deduction significantly reduces the tax liability for 1099/C2C contractors, making the higher C2C rate even more profitable.