W-2 vs 1099 — the employer's cost comparison
Same gross amount, two legal shapes. The result panel is the employer's true cost of W-2 employment; the comparison shows the contract amount that buys the work alone.
Result — California — $75,000.00/employee — 1 employee — W-2 vs 1099
| Line | Per year |
|---|---|
Gross wagesWhy this line?The gross wages the employer pays — the base on which every employer tax and cost in this result is computed. Why this rate: Not a tax — it is the agreed pay, before the employer's own costs are added. What changes it: Headcount and pay levels: every cost line except health insurance scales from this amount. Source: IRS — Rev. Proc. 2025-32 (IR-2025-103, 2025-10-09) — verified 2026-10-22. | $75,000.00 |
Employer Social Security (FICA)Why this line?The employer's Social Security contribution: 6.2% of each employee's wages up to the $184,500 wage base (2026). It mirrors the employee's 6.2% — the employer pays it on top of the salary, it is not taken out of the employee's pay. Why this rate: IRC §3111 sets the employer rate equal to the employee rate: 6.2% each. What changes it: It stops for an employee once that employee's wages pass $184,500 for the year; the SSA re-sets the base annually. Source: SSA 2026 wage base + IRC §3101/3111 rates; cross-checked in J1 correction (IRS/SSA) — verified 2026-10-22. | $4,650.00 |
Employer Medicare (FICA)Why this line?The employer's Medicare contribution: 1.45% of all wages, no cap — the mirror image of the employee's Medicare line. There is NO employer match for the Additional Medicare Tax. Why this rate: IRC §3111: the employer pays the same 1.45% as the employee. What changes it: It scales with total payroll; nothing caps or stops it. Source: IRC §3101/3111 — no wage cap — verified 2026-10-22. | $1,087.50 |
FUTA (federal unemployment)Why this line?FUTA — the federal unemployment tax, paid ONLY by the employer: 0.6% net on the first $7,000 of each employee's wages (a maximum of $42 per employee per year at the standard rate). It funds the federal side of unemployment insurance. Why this rate: The statutory rate is 6.0%, but employers normally earn a 5.4% credit for paying state unemployment tax on time, leaving 0.6% (IRC §§3301-3302). What changes it: It is exhausted very early in the year (after $7,000 of wages). It rises above 0.6% only in states that lose part of their credit ('credit reduction' states — the final list is published each November). Source: IRC §3301/3302 — FUTA 6.0% on first $7,000, standard state credit 5.4% — verified 2026-10-22. | $42.00 |
SUTA (California unemployment, new-employer rate)Why this line?SUTA — the state unemployment tax, paid only by the employer, on the first slice of each employee's wages (the state's 'wage base': as low as $7,000, as high as $78,200 in Washington). This calculator uses the NEW-EMPLOYER rate. In states that publish industry-average rates only (LA, MN, MT, NM, UT, WA, WY), the line shows $0.00 with a warning instead of an invented rate. Why this rate: Each state sets its own wage base and new-employer rate in its unemployment law; the figures here come from the US Department of Labor's 'Significant Provisions of State UI Laws' (July 2026). What changes it: After a year or two the employer's own 'experience rate' replaces the new-employer rate — layoffs raise it, a stable workforce lowers it. The wage base and rate schedule are re-set by each state, some annually. Source: DOL/ETA — Significant Provisions of State UI Laws, Effective July 2026 — verified 2026-10-22. | $238.00 |
Workers compensation (ESTIMATION)Why this line?Workers compensation insurance — the policy that pays medical costs and lost wages after a workplace injury. Shown as an ESTIMATION: the calculator uses the middle of a published range for the broad risk class (office work is near $0.30 per $100 of payroll; construction several dollars). The low-high range is shown with the result. Why this rate: Rates are set per class code by state rating bureaus / NCCI, not by a single statute — which is why this line is an estimate with a range, never a point 'tax'. What changes it: The exact class code of the job (roofing ≠ carpentry), the state, and the employer's experience modification rate (claims history). Only an insurer's quote is exact — class rates are licensed (NCCI) and employer-specific. | $225.00 |
Benefits — health insurance (assumption)Why this line?What the employer pays toward your health insurance premiums. Shown as an ASSUMPTION, not a tax: the pre-filled default is $650 per employee per month, and it is meant to be replaced with the employer's real plan cost. Why this rate: There is no statutory rate. Most mid-size employers cover 70-85% of the employee premium; the default is an order-of-magnitude planning figure (BLS ECEC), never a quote. What changes it: The plan chosen, the employer's contribution policy, and how many employees are covered. It is a user input — change it and this line (and the total cost) change. | $7,800.00 |
Benefits — retirement match (assumption)Why this line?The employer's retirement-plan contribution (e.g. a 401(k) match), shown as an adjustable ASSUMPTION — pre-filled at 3% of wages, a common match formula. Why this rate: No statutory rate for a typical 401(k): the employer chooses the match. 3% of pay is a common design (e.g. 50% of the first 6% deferred). What changes it: The plan's match formula and employee participation. It is a user input, not a legal requirement (except for some plan types such as SIMPLE/SEP with their own rules, not modeled). | $2,250.00 |
Benefits — other (assumption)Why this line?Any other employer-paid benefits the user wants to count (life/disability insurance, HSA contributions, stipends), entered as a percentage of wages. Default is 0%. Why this rate: No statutory rate exists; this line exists so the total employer cost reflects the employer's actual benefits package. What changes it: Entirely a user assumption — entering a real policy cost changes the line directly. | $0.00 |
Total employer costWhy this line?The employer's true total cost of employing: gross wages + employer payroll taxes + workers compensation (estimate) + benefits (assumptions). The gap between this number and the salary is the 'burden'. Why this rate: Not a tax — the sum of the cost lines, shown so a hiring decision compares total cost, not just salary. What changes it: Every component above it — most of all wages themselves, then benefits assumptions, then the state (SUTA base/rates) and risk class (workers comp). Source: IRS — Rev. Proc. 2025-32 (IR-2025-103, 2025-10-09) — verified 2026-10-22. | $91,292.50 |
Compare scenarios
Employee (W-2): total employer cost
$91,292.50
Engine P2 result: wages + employer FICA, FUTA, SUTA, workers' compensation estimate and the default benefits package.
Contractor (1099): the contract amount
$75,000.00
Paying the same gross amount as a contract buys the work only — no employer payroll taxes, no benefits, no workers' compensation. It assumes a genuine independent-contractor relationship.
Take this result with you
The PDF is generated in your browser, on this device, from the result above — nothing is uploaded or kept. Prefer paper? This page also has a print layout (your browser's Print command) as a fallback.
Methodology, limits and sources
Rates verified on 2026-10-24 (primary sources listed per line).
Workers' compensation is an ESTIMATE range (NCCI-type class rates per $100 of payroll), never a quote. SUTA uses each state's new-employer rate or published class schedule; where a state assigns rates strictly by industry with no published schedule, the engine says so instead of inventing a rate.
What this comparison shows — and what it cannot decide
The W-2 column is the engine's full employer cost. The 1099 column is the same gross amount paid as a contract: the difference between the two columns is the employer's payroll taxes, workers' compensation and benefits — the part that disappears only if the relationship is genuinely an independent-contractor one.
Whether a worker is an employee or a contractor is a legal determination based on the actual working relationship; no calculator makes it, and this page does not try. If the relationship is employment in substance, the W-2 column is the cost and the 1099 column is not available.
The worker's side of the same choice
The mirror comparison — what the worker keeps as a 1099 versus as a W-2 on the same gross — is the 1099 vs W-2 calculator (worker view).