W-2 vs 1099 Cost Calculator — Compare by State
Pick your state to see the exact break-even contractor rate and total employer cost for W-2 vs 1099 workers.
A $60,000 W-2 employee costs employers $65,802 on average in 2026 — that's $5,802 in taxes and overhead on top of salary. But the number swings from $65,285 in Indiana to $68,022 in Hawaii. A 1099 contractor is cheaper only if their rate stays below your state's break-even point. Pick your state below.
National Average
$65,802
at $60K salary
Lowest Cost
$65,285
Indiana
Highest Cost
$68,022
Hawaii
Employer Tax Overhead
$5,802
avg above salary
Select Your State
Jump to your state's full W-2 vs 1099 breakdown and break-even calculator
The full calculator lets you enter any salary, contractor rate, and benefits package for instant comparison.
W-2 vs 1099 Break-Even by State
Total employer cost at $60,000 salary — click any state for the full breakdown
Break-even rate = total W-2 cost including basic benefits ($7,200/yr). Contractor is cheaper below this rate.
Pick Your State
Each state page shows the full W-2 vs 1099 cost breakdown, classification test used, and misclassification penalties.
What makes W-2 employees cost more than their salary
FICA: 7.65% of wages
Social Security (6.2%) + Medicare (1.45%) — employer pays these; contractors pay their own
FUTA + SUTA: 2–8% (state-dependent)
Federal and state unemployment insurance — not owed on contractor payments
Workers' comp: 0.3–2% of payroll
Required insurance for W-2 employees; not required for 1099 contractors
Benefits: $7,200–$16,800/yr
Health insurance, PTO, retirement match — optional for contractors
1099 contractors charge 20–30% above equivalent W-2 salary to cover their own self-employment taxes (15.3%) and benefits. That premium usually lands near the break-even point — which is why the math is closer than most employers expect.
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