Cost of Employment RulerEmployer cost, with every assumption exposed

Your numbers

The employee's gross annual salary, before any employer costs.
Employer-paid benefits: health, retirement match, etc. Leave at 0 if none — 0 means excluded, not that the obligation is zero.
What you'd pay an independent contractor. Defaults to the W-2 salary so the comparison starts like-for-like; change it to your actual contractor rate.
Advanced — statutory rates & additional inputs
Employer-of-record fee, if you're comparing that route. Leave blank to omit the EOR column; an explicit 0 is treated as a real entered fee.

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US W-2 vs 1099 cost comparison

Employer cost for the amounts entered, 2026

W-2 is USD $9,222 more than 1099 per year

W-2 employer cost USD $129,222 · 1099 cash cost USD $120,000

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This comparison estimates employer-side cost only. It assumes the worker classification is already correct and does not determine whether a worker may legally be treated as a contractor or hired through an EOR.

W-2 and 1099 are United States classifications. Other countries have different employee/contractor rules and terminology.

W2 (direct hire)

Base pay USD $120,000 → estimated employer cost USD $129,222.

W-2 employer-paid items, 2026
Employer-paid itemEstimate
Social Security (employer)USD $7,440
Medicare (employer)USD $1,740
FUTA (net of maximum credit)USD $42

Largest employer-paid item: Social Security (employer).

1099 (independent contractor)

Contract amount USD $120,000 → employer cash cost USD $120,000.

No employer-side payroll tax lines are included for the contractor column. This assumes the worker is already properly classified as an independent contractor and does not address reporting, backup withholding, insurance, state-specific, or misclassification obligations.

Difference

W2 employer cost is USD $9,222 more than the 1099 cash cost, for the amounts and assumptions you entered.

Cost is not a lawful basis for choosing how to classify a worker. Classification is determined by law and the actual working relationship; the lower-cost option may be unlawful for a given role.

What is not included

Employer-paid statutory items, plus any benefits and overhead you entered, are included. Excluded:

  • none for this jurisdiction

Employee-withheld items are shown for transparency and never affect the employer-cost difference. Local taxes, workers' compensation where not entered, paid leave, and termination costs are not modeled.

Result validity

  • W-2 result evaluated on 2026-09-01 using the source rows selected for that date.
  • Validity boundary: 2027-01-01. The comparison is withdrawn on that date unless the required W-2 rows have been reconfirmed.

Copy a summary

Employer cost for the amounts entered (2026)
W-2 employer cost: USD $129,222
1099 cash cost: USD $120,000
Difference (W-2 vs 1099): USD $9,222 more
Result evaluated: 2026-09-01
Validity boundary: 2027-01-01 (withdrawn on that date unless reconfirmed)
Cost is not a lawful basis for classification. Planning estimate, not advice.

Frequently asked questions

Is W-2 or 1099 cheaper for an employer?

This page estimates employer-side cost for each from the amounts you enter and shows the difference. Cost alone does not determine which classification is lawful for a role.

What costs are included for a 1099 contractor?

Only the contract amount and any admin overhead you enter. No employer payroll-tax lines are added, because a properly classified contractor pays self-employment tax directly.

Planning estimate from user-entered assumptions and published rate tables. Not payroll, tax, legal, or classification advice. Confirm exact obligations with a professional.

What this comparison covers

This compares the employer-side amounts you enter; it does not turn the cheaper column into a worker-classification answer.

Included in this result

  • Supported W-2 employer statutory cost
  • The contractor amount and contractor overhead you enter
  • An EOR column only when you explicitly enter an EOR platform fee

Not included in this result

  • A legal classification determination
  • Unentered EOR fees or other commercial assumptions

Employer input / scope: Use your real contractor or EOR commercial terms rather than treating a market-average fee as a fact about your deal.