W-2 vs. 1099 vs. Corp-to-Corp (C2C) Calculator
Compare net take-home pay, total tax liability, business write-offs, and equivalent billing rates across employment structures.
Compensation & Filing
Deductions & Expenses (1099 & C2C)
S-Corp distributions avoid 15.3% Self-Employment FICA tax.
W-2 Employee
StandardEmployer pays 7.65% FICA; standard deduction applied.
Net Take-Home
$0
1099 Contractor
QBI + SE Tax15.3% SE tax, QBI 20% deduction, business write-offs.
Net Take-Home
$0
Corp-to-Corp (S-Corp)
OptimalSalary + Distributions split to minimize FICA.
Net Take-Home
$0
Equivalent Hourly Rate Needed to Match W-2 Net Take-Home
Target W-2
$100.00/hr
Needed on 1099
$0.00/hr
Needed on C2C
$0.00/hr
Financial Distribution Comparison
AI S-Corp & Tax Shelter Blueprint Serverless AI
Generates custom salary/distribution splits, Section 179 write-offs, and Solo 401(k) strategy.
What this calculator does
This calculator compares the true financial outcome of working as a W-2 employee, a 1099 independent contractor, or running a Corp-to-Corp (C2C) arrangement via an S-Corporation. It is built for software engineers, consultants, and independent professionals weighing different employment structures. By evaluating your gross compensation, the calculator breaks down net take-home pay, total tax liability, and business write-offs. It requires basic inputs like your hourly rate or annual salary, filing status, state tax rate, and estimated business expenses. The outputs allow you to directly compare which legal structure minimizes your tax burden and maximizes your net earnings.
How the math works
The calculations follow federal tax schedules and IRS Self-Employment tax guidelines for 2026. For a W-2 employee, you pay half of the FICA taxes (7.65%), while your employer covers the rest. Standard federal and state income tax brackets apply on your gross earnings.
For a 1099 contractor, you operate as a sole proprietor. You must pay the full 15.3% Self-Employment tax, covering both the employer and employee portions of Social Security and Medicare. However, you can deduct eligible business expenses and retirement contributions (like a Solo 401(k)) to lower your taxable income. You may also qualify for the Qualified Business Income (QBI) deduction, which allows you to deduct up to 20% of your net business income.
Under the C2C (S-Corporation) structure, the math leverages the ability to split your net income into a W-2 salary and an owner's draw (distribution). The W-2 portion is subject to the 15.3% FICA tax, but the distribution portion completely avoids it. By setting a "reasonable salary" (e.g., 60% of net income) and taking the rest as distributions, you significantly lower your overall tax burden. This tool models this strategy precisely based on the 2026 tax year parameters.
Worked example
Consider a consultant earning $150,000 annually as a single filer in a state with a 5% income tax rate, holding $10,000 in eligible business expenses.
- W-2 Employee: The gross is $150,000. After standard deductions, 7.65% FICA, and income taxes, the net take-home pay is approximately $103,500.
- 1099 Contractor: The gross is $150,000. Deducting the $10,000 in expenses leaves $140,000. The full 15.3% SE tax applies. After income tax, the net take-home (after taxes and expenses) is around $101,000. The contractor needs a higher gross rate to match the W-2 net.
- C2C (S-Corp): The gross is $150,000. Deducting the $10,000 in expenses leaves $140,000. If 60% ($84,000) is paid as W-2 salary and 40% ($56,000) as distributions, FICA tax only applies to the $84,000. After federal and state income taxes, the net take-home jumps to approximately $107,000, outperforming the standard W-2.