BenefitLense
Contractor vs. Full-Time

Is That Contract Rate Really Worth It?

A $100/hr contract rate sounds great — until you factor in self-employment tax, no benefits, and unpaid downtime. Find your true equivalent.

W-2 Full-Time Employee

$
$

Employer-paid premium value. Avg employer contribution: ~$7,200/yr (single).

$
$

Dental, vision, life insurance, gym, education, etc.

1099 Contractor

$

Subtract vacation, holidays, and time between contracts (typically 4–8 weeks).

$

Software, equipment, accountant, LLC fees, etc.

$

ACA marketplace individual plan avg: ~$7,000–$10,000/yr.

Fill in both sides above to see a true apples-to-apples comparison.

The Hidden Costs of Contracting

Self-Employment Tax

As a 1099 contractor, you pay both the employee and employer portions of Social Security and Medicare — a total of 15.3% on net earnings (vs. 7.65% as a W-2 employee). This alone can cost $10,000–$20,000/year.

Unpaid Time

Contractors don't get paid for holidays, sick days, or vacation. A standard 52-week year with 2 weeks off and 10 holidays means roughly 4 weeks of unbillable time — about 8% of your gross income.

Benefits You Must Buy

Health insurance, retirement contributions, disability insurance, and professional liability coverage all come out of your pocket. These can easily total $15,000–$25,000 per year for a family plan.