Straight answers.
No filler.

A W2 employer withholds income tax from every paycheck and splits FICA (Social Security and Medicare) with you — you pay 7.65%, they pay 7.65%. A 1099 contractor receives the full invoice amount with nothing withheld, and pays the full 15.3% self-employment tax alone.

That 7.65% difference is the first thing to account for when comparing a 1099 rate to a W2 salary. On top of that, W2 employees typically receive paid time off, health insurance, and other benefits that 1099 contractors pay for out of pocket. The calculator on the homepage accounts for all of it — including a benefits offset for the PTO and health insurance cost most contractors absorb.

A practical starting point: set aside 25–30% of every payment into a separate savings account the moment it clears. That covers federal income tax and self-employment tax for most contractors earning under $150,000 in states without income tax. Add 4–8% for high-income-tax states like California, New York, or Oregon.

The exact number depends on your gross income, your deductions, your state, and your filing status. Use the calculator with your real inputs to get a sharper estimate — the output divided by four is a reasonable quarterly payment target.

The single most useful habit: open a dedicated tax savings account and treat the set-aside as an automatic transfer, not a decision made each time.

Self-employment tax is Social Security and Medicare — the same taxes W2 employees pay — except on W2, the employer pays exactly half. As a 1099 contractor, you pay both halves: 12.4% Social Security (on the first $184,500 of net income in 2026) plus 2.9% Medicare, for a combined 15.3%. Applied to 92.35% of your gross income per IRS Schedule SE rules.

It feels high because you're now seeing what your employer was paying invisibly on your behalf when you were W2. It didn't disappear — it just moved to your invoice.

Two things offset it: you can deduct half of SE tax from gross income before calculating federal income tax, and most 1099 contractors qualify for the 20% QBI deduction under Section 199A. Both are factored into the calculator automatically.

The four federal deadlines are roughly April 15, June 15, September 15, and January 15 of the following year — each shifting a day or two when they fall on a weekend or holiday. Most states follow a similar schedule.

If you miss a payment, the IRS charges an underpayment penalty — interest on what you should have paid, calculated from the due date. It applies per quarter, independently. Paying everything in April doesn't erase a missed September payment. The penalty is usually modest but entirely avoidable.

The safest approach: pay at least 100% of last year's total tax liability across four equal payments (110% if your income exceeded $150,000). This is the IRS safe harbor — follow it and you owe no underpayment penalty regardless of how much your income grew. Full guide at Quarterly Estimated Taxes.

Home office: Yes, if the space is used regularly and exclusively for business. You can use the simplified method ($5/sq ft, up to $1,500) or deduct the actual percentage of your home costs that the workspace represents.

Health insurance: Generally yes — premiums for yourself, your spouse, and dependents are deductible above the line, reducing your AGI directly. The key exception: you can't claim the deduction for any month you were eligible for employer-subsidized coverage through a spouse's plan.

Equipment and software: Business equipment, tools, and software are deductible. Items with a useful life beyond one year are typically capital expenses, though Section 179 often allows immediate deduction. Software subscriptions are fully deductible in the year paid.

See the full breakdown at Top Contractor Write-Offs.

An LLC by itself does not reduce your taxes. A single-member LLC is a disregarded entity — all income flows to your personal return exactly as if you were a sole proprietor. You pay the same SE tax, the same income tax. The LLC's value is legal liability protection: your personal assets are separated from your business assets.

What does reduce taxes is an S-Corp election — a tax status you can apply to an LLC once your net income consistently clears roughly $80,000/year. Under an S-Corp, only your salary portion is subject to payroll tax. Distributions are not. The savings can be significant at higher income levels, but so are the ongoing costs (payroll, additional tax filing, accounting).

Full breakdown at the S-Corp Election Guide. The calculator also shows your estimated S-Corp savings at your income level.

You can't compare them directly. A $95/hr 1099 contract is not equivalent to a $95/hr W2 rate — or even to a $197,600/year W2 salary — because the tax structures are completely different and the benefits situation is different.

To compare properly you need to: (1) calculate the 1099 net take-home after SE tax, federal tax, and state tax; (2) subtract the cost of benefits you'll now pay yourself — health insurance, retirement contributions you fund fully, and the value of unpaid time between contracts; (3) compare that to the W2 net after its payroll tax, income tax, and factoring in the benefits the employer covers.

That's exactly what the calculator does. Enter your rate, state, and filing status — it shows both numbers side by side so the comparison is direct.

It's accurate enough to understand your situation clearly and make sound decisions about contract offers. It's not a substitute for a CPA when it comes to actual filing.

What it does well: applies 2026 federal brackets correctly, accounts for SE tax on 92.35% of gross income, deducts half of SE tax before federal income tax, applies the QBI deduction, and uses state rates that are calibrated to be reasonable approximations for mid-to-high income earners.

What it can't do: account for your specific business deductions, local taxes, credits, or the full complexity of your state return. The Disclaimer page walks through every simplification in detail.

Use it to understand the landscape. Use a CPA to confirm the specifics before you file or make major decisions.