Hourly vs Salary vs 1099: Which Pays Better in 2026?
If you're comparing job offers or considering going freelance, one of the hardest questions is: which pays better — a salaried W-2 job, an hourly W-2 position, or 1099 contracting? The answer depends heavily on taxes, benefits, and where you live.
W-2 Employment (Salaried or Hourly)
As a W-2 employee, you pay 7.65% for FICA taxes (Social Security + Medicare) and your employer pays the other 7.65%. You're eligible for unemployment benefits, workers' comp, and typically receive benefits like health insurance, 401(k) matching, and paid time off.
A $70,000 salary might cost your employer roughly $75,500 after payroll taxes, and your take-home after federal tax, FICA, and state tax could be around $52,000-$56,000 depending on your state.
1099 Contracting (Self-Employed)
As a 1099 contractor, you pay the full 15.3% self-employment tax (both the employee and employer portions). However, you can deduct business expenses (home office, equipment, software, health insurance premiums) before calculating self-employment tax. You also have more flexibility with retirement accounts like a Solo 401(k).
To match the take-home pay of a $70,000 salary, a 1099 contractor typically needs to earn around $85,000-$95,000 — roughly 25-35% more — to account for self-employment tax and lost benefits.
Hourly vs Salary: What's Different?
Hourly employees get overtime pay (1.5x for hours over 40/week), which salary employees don't. But salaried roles often have better benefits, more stability, and predictable income. A $35/hour job at 40 hours/week equals $72,800/year — but if you regularly work 45 hours, you'd earn $85,540 with overtime.
The State Tax Factor
Where you live dramatically affects take-home pay. A $70,000 salary in Texas (no state income tax) leaves you with roughly $56,000 after federal and FICA. The same salary in California could net around $51,000 — a $5,000 difference.
Try the Calculator
Use CalcInstant's salary calculator to compare W-2 vs 1099 scenarios and see your exact take-home pay for any state:
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