Contractor vs Employee Tax Impact Calculator

Model real world tax differences between contractor and employee status using self employment tax payroll withholding standard deduction state rate benefits and business expenses Then see take home pay effective rate and total cost with editable assumptions Built for clarity speed and deep scenario planning including QBI deductions retirement contributions and additional medicare surtax

Note: This is a simplified estimator. Defaults approximate 2024 US figures (standard deduction & brackets). Edit assumptions to match your year and location. Not tax advice.
Shared Inputs
$
%
Flat rate approximation applied to taxable income.
$
$
Employee Settings
$
%
Approx. 7.65% default (SS + Medicare). Adjust for your case.
$
Health, retirement match, etc.
Contractor Settings
$
%
Simplified SEP-IRA estimate as % of profit after half SE tax.

Employee Result
Take‑Home Pay
$83,388.00
Total Taxes
$30,612.00
Effective rate: 25.51%
Gross Income$120,000.00
Pretax Deductions-$6,000.00
Taxable Wages$114,000.00
Standard Deduction-$14,600.00
Taxable Income$99,400.00
Federal Income Tax-$16,921.00
State Income Tax-$4,970.00
Employee FICA-$8,721.00
Employer total cost: $135,180.00 (includes payroll taxes and benefits).
Contractor Result
Take‑Home Pay
$59,324.80
Total Taxes
$22,088.16
Effective rate: 18.41%
Gross Revenue$120,000.00
Business Expenses-$20,000.00
Net Profit (Schedule C)$100,000.00
Half of SE Tax Deduction-$7,064.78
Self‑Employed Retirement-$18,587.05
AGI (approx.)$74,348.18
Standard Deduction-$14,600.00
QBI Deduction-$11,949.64
Taxable Income$47,798.54
Federal Income Tax-$5,568.68
State Income Tax-$2,389.93
Self‑Employment Tax-$14,129.55
Side‑by‑Side Comparison
Take‑Home Difference (Contractor − Employee)
$-24,063.20
Tax Difference (Contractor − Employee)
$-8,523.84
Employer Total Cost (Employee)
$135,180.00
Metric Contractor Employee
Gross Amount$120,000.00$120,000.00
Total Taxes$22,088.16$30,612.00
Take‑Home$59,324.80$83,388.00
Effective Tax Rate18.41%25.51%
Retirement Contributions Counted$18,587.05$0.00
FICA / SE Tax$14,129.55$8,721.00
FAQs
It estimates taxes and take home pay for two paths. One path is contractor with self employment tax and business deductions. The other path is employee with payroll withholding and standard benefits.
Contractors pay both sides of Social Security and Medicare. Employees pay only the worker side and the employer pays the other side. The calculator includes that difference.
It applies progressive brackets on taxable income after the standard deduction. Contractor results also include the half self employment tax deduction and an optional QBI deduction.
No. It is a simplified model. Complex limits wage tests and phase outs are not fully modeled. You can edit inputs and rates to fit your case.
If enabled the model takes up to twenty percent of qualified business income and limits it to twenty percent of taxable income before QBI. It ignores wage and property limits.
It uses a flat percentage on taxable income as a simple proxy. Many states have brackets and different rules. Adjust the rate field to approximate your state.
It adds employer payroll taxes to salary and adds the annual value of benefits. This helps you compare a contractor rate with a full time offer cost.
No. Results are estimates only. You should review your situation with a qualified professional and consult current year rules before making decisions.

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Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.