What 1099 hourly rate equals a $100k salary?
A salary converts to an hourly rate by dividing: $100,000 over 2,080 hours — 40 a week, 52 weeks — is $48.08. Invoice at that rate and the year ends short: the invoice now has to carry the employer's half of Social Security and Medicare, a health plan bought at retail and the cost of running the business, and there are fewer days to spread the total over.
Reversed: what 1099 revenue leaves the same spendable cash as the salary? On the offer below, $124,188 a year, or $64.68 an hour (open that scenario).
The answer at three salaries
| W-2 salary | Break-even 1099 revenue | Hourly rate | Multiple of salary |
|---|---|---|---|
| $75,000 | $98,598 | $51.35 | 1.31x |
| $100,000 | $124,188 | $64.68 | 1.24x |
| $150,000 | $175,247 | $91.27 | 1.17x |
Open a row: $75,000 · $100,000 · $150,000. Each offer adds a 5% bonus, a 4% 401(k) match, $7,200 of employer-paid premiums and 20 paid days off; the contractor spends $10,000 on the business, $7,200 on a private plan, and takes 20 unpaid days off. Single filer, 5% state tax, 2026 federal rules.
The multiple falls as the salary rises, while the gap itself barely moves: $23,598 of extra revenue at $75,000, $25,247 at $150,000, a spread of $1,649 across a doubling of the salary. Some is fixed by the inputs: the same $17,200 of expenses and premiums at every salary, 22.9% of the smallest and 11.5% of the largest. A constant number of dollars divided into a bigger salary is a smaller multiple.
Where the gap comes from
The break-even equalizes spendable cash: W-2 pay after tax against 1099 revenue after expenses, tax and the contractor's own premium. Four things separate them, and the fourth changes only the hourly rate. Figures are at the $100,000 break-even.
Both halves of Social Security and Medicare
An employee pays 7.65% of wages in FICA — the payroll tax funding Social Security (6.2%) and Medicare (1.45%) — and the employer pays the same again. Self-employment tax is that whole 15.3% on one person, charged on 92.35% of net profit rather than all of it, an adjustment standing in for the employer half being a business cost. The contractor owes $16,108 of it, against $8,033 withheld from the employee. Nothing here reaches the $184,500 Social Security wage base, above which only the Medicare half continues.
A health plan bought at retail
The contractor pays $7,200 for a private plan. Set that input to zero and the break-even falls by $8,579 — more than the premium, because the deduction for it reduces income tax but not self-employment tax. The employer's $7,200 on the other side never reaches the employee as cash, so it does not move the break-even at all.
Business expenses
$10,000 a year of expenses raises the revenue target by exactly $10,000. Expenses are deductible against both self-employment tax and income tax, so an extra dollar of cost and an extra dollar of revenue cancel.
Days that are not billed
20 unpaid days off change not the revenue target but what it is divided by. The model works a 260-day year, subtracts the unpaid days and bills 8 hours a day, so $124,188 spreads over 240 days — 1,920 hours, $64.68 an hour. It stops subtracting at 150 billable days.
Three things the offer carries sit outside the comparison, none being spendable cash: the 4% 401(k) match ($4,000 here, reported on its own), the $7,200 subsidy, and 20 paid days off. The 5% bonus is cash and does count, so the W-2 side is $105,000, not $100,000.
What pulls the other way: the QBI deduction
Section 199A lets the owner of a pass-through business deduct up to 20% of qualified business income, capped at 20% of taxable income before the deduction. The employee gets none of it; the contractor gets $16,529.
Switch it off and the break-even rises by $7,359 to $131,547 — $68.51 an hour, 1.32x the salary (that scenario). Whether a contract qualifies is not for a calculator to decide, which is why the input is a switch.
Above $201,750 of taxable income (single filer, 2026) the deduction is limited by the W-2 wages the business paid and the property it owns — a solo contractor has neither. The model applies that phase-down; at the $150,000 break-even it reports the deduction as not limited, taxable income being below the threshold, so no row in the table is affected.
The 1.3x to 1.5x rule of thumb
A rule circulates in contracting advice: charge 1.3 to 1.5 times the salary equivalent. It is a rule of thumb, not a published or statutory figure, and no source is offered for it here.
Against the table, the model's multiples are 1.31x, 1.24x and 1.17x: only the lowest salary reaches 1.3x, and the other two fall short of the range entirely. Removing the QBI deduction at $100,000 lifts that case to 1.32x, inside the range. Nothing here reaches 1.5x, because break-even is all the model computes. The margin a rule of thumb builds in — gaps between contracts, unbilled hours, the cover listed below — is not in these numbers.
Run your own offer
The revenue target moves with the base salary and bonus, filing status, the state rate, the contractor's expenses and premium, and the QBI switch; unpaid days off move the hourly rate alone. A quoted rate can quietly omit two of them, both the contractor's own costs: real business expenses, and the real premium for an individual plan rather than the $7,200 here. Each link above opens with the 1099 revenue already set to the break-even.
Assumptions and limits
- Single filer, standard deduction of $16,100, 2026 federal brackets. Married filing jointly is one toggle away and changes every figure.
- State tax is a flat 5% on federal taxable income. No state's real rules are modeled.
- "Break-even" equalizes spendable cash after tax and nothing else: salary plus bonus less FICA and income tax on one side, revenue less expenses, tax and the premium on the other. The 4% 401(k) match is reported separately as illiquid wealth; neither it nor the $7,200 subsidy nor the 20 paid days off takes any part.
- The employee pays nothing toward their own coverage. A payroll premium share would lower the W-2 side and with it the break-even.
- The hourly rate assumes every billable day is billed, with nothing allowed for time spent finding work, invoicing or waiting to be paid.
- Not modeled: unemployment insurance, workers' compensation, employer disability and life cover, the retirement accounts only the self-employed can open, and the risk of a gap between contracts.
- Whether a role may lawfully be treated as 1099 is a classification question, turning on the degree of control in the working relationship and settled for federal tax purposes by the IRS (Independent contractor or employee). It is not a pricing decision.
Method and sources
The model is calculateContractorVsW2 in the 1099 vs. W-2 calculator.
The break-even is solved by bisection against that same model rather than approximated, so the
revenue figures are exact to the dollar; the hourly rate is that revenue over
240 billable days of 8 hours. Scenario links round it to
the nearest $1,000.
- Topic no. 554 — the 12.4% and 2.9% self-employment rates, the 92.35% of net earnings taxed, and the deduction for half the tax, which the model takes before income tax.
- Topic no. 751 — the 6.2% and 1.45% employee shares behind 7.65%.
- Publication 15 — the 2026 wage base of $184,500.
- Rev. Proc. 2025-32, §4.26 — the Section 199A threshold of $201,750.
- Tax inflation adjustments for 2026 — the $16,100 standard deduction and the brackets.
- Qualified business income deduction — the 20% deduction and the wage and property limitation.
- Instructions for Form 7206 — the self-employed health insurance deduction does not reduce net earnings for self-employment tax.
Open this scenario in the calculator
All figures on this page come from the 1099 vs. W-2 calculator. Change any input there and the numbers update.