Salary vs. Contractor Rate Calculator
Compare take-home value of a salary job vs. contracting.
Enter your values
Enter the annual salary in $.
Enter the employer benefits value (health, 401k match, etc.) in $.
Enter the paid time off in weeks.
Enter the extra self-employment tax (employer share) in %.
Enter the billable hours per year as contractor in hours.
Results update instantly as you type — no submit needed. Your values are remembered on this device, and the shareable link reopens the calculator with exactly these numbers.
- Total salaried compensation value
- $102,000.00
- Extra self-employment tax to cover
- $6,885.00
- Required contractor hourly rate
- $60.49
- Equivalent salaried hourly rate
- $43.27
Quick answer
A contractor typically needs to charge noticeably more per hour than an equivalent salary implies, to cover lost benefits, paid time off, and the employer-side share of payroll taxes.
Equivalent rate = (salary + benefits value + extra SE tax) / billable hours
At a glance
| What it does | Compare take-home value of a salary job vs. contracting. |
|---|---|
| Category | Finance |
| Inputs needed | Annual salary, Employer benefits value (health, 401k match, etc.), Paid time off, Extra self-employment tax (employer share), Billable hours per year as contractor |
| Main output | Total salaried compensation value |
| Formula | Equivalent rate = (salary + benefits value + extra SE tax) / billable hours |
| Cost | Free — no sign-up, no download |
How to use the Salary vs. Contractor Rate Calculator
- 1Enter your salary and the dollar value of employer benefits (health insurance, 401k match, etc.).
- 2Enter your paid time off and the extra self-employment tax you'd owe as a contractor.
- 3Divide the required total income by realistic billable hours (often 1,500-1,900 for contractors, not 2,080).
Inputs explained
- Annual salary($)
- Enter the annual salary in $.
- Employer benefits value (health, 401k match, etc.)($)
- Enter the employer benefits value (health, 401k match, etc.) in $.
- Paid time off(weeks)
- Enter the paid time off in weeks.
- Extra self-employment tax (employer share)(%)
- Enter the extra self-employment tax (employer share) in %.
- Billable hours per year as contractor(hours)
- Enter the billable hours per year as contractor in hours.
Worked example
Using the values the calculator loads with:
Inputs
- Annual salary90000 $
- Employer benefits value (health, 401k match, etc.)12000 $
- Paid time off3 weeks
- Extra self-employment tax (employer share)7.65 %
- Billable hours per year as contractor1800 hours
Results
- Total salaried compensation value$102,000.00
- Extra self-employment tax to cover$6,885.00
- Required contractor hourly rate$60.49
- Equivalent salaried hourly rate$43.27
Frequently asked questions
Why aren't billable hours the same as work hours?
Contractors spend unpaid time on admin, marketing and gaps between contracts, so billable hours are usually well below full-time hours.
What other costs should contractors budget for?
Add costs for your own health insurance, retirement contributions, liability insurance and slower periods between projects.
What do I need to enter into the Salary vs. Contractor Rate Calculator?
Just 5 values: annual salary, employer benefits value (health, 401k match, etc.), paid time off, extra self-employment tax (employer share), billable hours per year as contractor. Every field starts with a realistic example, so you can change one number at a time and watch the result update instantly.
How does the Salary vs. Contractor Rate Calculator work out the answer?
A contractor typically needs to charge noticeably more per hour than an equivalent salary implies, to cover lost benefits, paid time off, and the employer-side share of payroll taxes. It applies the formula Equivalent rate = (salary + benefits value + extra SE tax) / billable hours and shows the working so you can check each step by hand.
Is the Salary vs. Contractor Rate Calculator free, and do I need an account?
It is completely free with no sign-up, no download and no usage limit. Everything is calculated in your browser, so the numbers you type never leave your device.
Results are estimates for general information. For medical, legal, structural or financial decisions, confirm with a qualified professional.