Compare salary and contractor income without guessing
A contractor rate is not directly comparable with an employee salary. Contractors need to cover unpaid admin time, benefits, insurance, business expenses, tax payments, and periods without client work. Employees may receive pension contributions, health cover, paid leave, bonus, and employer support that do not show up in base salary.
This tool gives one fast comparison for two common decisions:
- US: W-2 employee salary vs 1099 freelance hourly rate.
- UK: PAYE salary vs contractor day rate, with inside or outside IR35 assumptions.
How to use it
- Choose United States or United Kingdom.
- Enter the employee compensation package.
- Enter the contractor rate and realistic billable time.
- Compare the estimated advantage and equivalent rate.
What the result means
The equivalent rate is the contractor rate needed to roughly match the employee option under the assumptions entered. It is not a guarantee of after-tax income. Use it to price a proposal, sanity-check a day rate, or compare a job offer with a freelance opportunity.
Important limits
This calculator uses simplified tax and benefits assumptions. IR35, employment status, expense deductibility, insurance, benefits, and local tax rules can materially change the result. Treat it as planning support, not tax or legal advice.