Disclaimer

What this calculator is for

RealContractorPay exists to help independent contractors, freelancers, and solopreneurs understand the approximate difference between 1099 contractor compensation and W2 employee compensation on an after-tax basis. It is designed to answer the question: "Given my rate and state, roughly how much will I actually keep?"

It is not designed to produce numbers precise enough to file taxes with, to rely on for exact quarterly estimated tax payments without further verification, or to serve as a substitute for the analysis a licensed CPA would perform using your full financial picture.

Why the numbers are estimates

Several unavoidable simplifications affect the accuracy of every output this calculator produces:

• State income tax rates are flat approximations. Real state income tax calculations involve graduated brackets, local taxes, deductions, and credits that vary by filer. The flat effective rates used here are calibrated to be reasonable approximations for mid-to-high income earners, but they will overstate or understate your actual state liability depending on your situation.
• The QBI deduction is applied at a flat 20%. The actual Section 199A qualified business income deduction is subject to income phase-outs, W-2 wage limitations for certain businesses, and other restrictions that the calculator cannot evaluate without knowing your full return.
• The half-SE deduction is included. The calculator correctly deducts half of self-employment tax from gross income before calculating federal taxable income, which is how the IRS handles it. But other above-the-line deductions — SEP-IRA contributions, self-employed health insurance, HSA contributions — are not factored in, which means the calculator may overstate your federal tax liability if you claim those deductions.
• The W-2 Benefits & PTO Offset is a fixed estimate. The offset of 15 unpaid PTO days plus $6,000 in health insurance costs is a simplified middle-ground estimate. Actual PTO policies, health insurance costs, and other benefits vary substantially by employer, location, and coverage level.
• The S-Corp analysis uses a 60/40 split. The salary-to-distribution ratio is a starting point. The IRS requires that S-Corp owner-employees pay themselves a "reasonable compensation" — a fact-specific determination that a CPA or tax attorney should make for your specific situation.
• Additional Medicare Tax is included for high earners. The 0.9% Additional Medicare Tax on income over $200,000 (single) or $250,000 (married filing jointly) is applied where relevant.

This is not tax advice

Nothing on this Site — the calculator, the guides, the FAQ, the about page, or any other content — constitutes tax advice, legal advice, financial planning advice, or accounting services. Jonathan is not a CPA, tax attorney, or financial advisor. The information provided is based on publicly available IRS guidance and general tax principles, interpreted for educational purposes.

Tax law is complex, changes frequently, and applies differently based on individual circumstances that this calculator cannot evaluate. A licensed CPA who reviews your actual income, deductions, business structure, and state filing situation will give you a far more accurate picture than any general-purpose calculator can.

Affiliate disclosure

Some links on this site — currently to Gusto and Collective — are affiliate links. If you click one and sign up for a paid plan, RealContractorPay may receive a commission. This does not affect the price you pay, and it does not affect how we describe or evaluate those products. We only recommend services we believe are genuinely useful and appropriate for independent contractors.

The mention of any product, service, or company on this site does not constitute an endorsement of everything that company does, a guarantee of service quality, or a suggestion that the product is right for your specific situation. You should evaluate any tool or service independently before committing.

Errors and updates

We make every effort to keep tax brackets, state rates, and calculation logic current and correct. The federal brackets are updated each January following IRS publication. State rates are reviewed quarterly. Despite this, errors may exist. Tax law changes between our update cycles. Rates we believe are current may have been modified by legislative action.

If you find an error — a state rate that seems wrong, a calculation that doesn't match what you'd expect — please email hello@realcontractorpay.com. We investigate every reported error and issue corrections promptly.

Limitation of liability

RealContractorPay and its owner expressly disclaim all warranties — express, implied, or statutory — regarding the accuracy, completeness, timeliness, or fitness for purpose of any information on this Site. We are not liable for any loss, damage, penalty, or financial consequence arising from your use of or reliance on this Site or its calculator outputs, including but not limited to tax underpayments, penalties, interest, or professional fees incurred as a result of decisions made based on information found here.

The calculator is provided as-is, free of charge, without any guarantee that it is error-free or suitable for your specific needs. Using it is your choice, and the responsibility for verifying any number that matters is yours.

When to seek professional advice

Please consult a licensed CPA or tax professional before:

• Filing or substantially changing your quarterly estimated tax payments
• Electing S-Corp status for your business entity
• Making a decision about accepting or declining a contract offer where the financial margin is close
• Claiming deductions (home office, vehicle, retirement contributions) for the first time
• Operating in multiple states or changing your state of residence mid-year
• Earning above the Additional Medicare Tax threshold ($200,000 single / $250,000 married)

A good CPA pays for itself many times over at contract income levels. The calculator is a starting point for understanding what to ask — not a replacement for the answer.

Contact

Errors, corrections, and questions about this disclaimer can be sent to hello@realcontractorpay.com.