Disclaimer
Effective date: May 18, 2026
1. Tax estimates only — federal scope
The calculator estimates federal taxes only: Self-Employment tax (Schedule SE) and federal income tax. No state or local tax is included. Add your state's marginal rate separately to size your total quarterly setaside. State quarterly due dates usually mirror the federal ones.
The estimate does not cover all situations: multi-state allocation, foreign-source income, the Alternative Minimum Tax (AMT), ACA premium tax credit interactions, special cases like clergy housing or fishing-boat-crew adjustments, or the additional 0.9% Medicare surtax above $200,000 single / $250,000 MFJ. QBI math uses the simplified 20%-below-threshold version; the above-threshold W-2-wage caps and SSTB phaseouts are summarized in the home page Guide but not modeled in the calculator.
2. Not professional advice
Nothing on this site is tax, legal, financial, investment, accounting, or career advice. The break-even calculator in particular is a planning estimate to inform conversations with a tax professional and a financial advisor — it is not a recommendation to leave W-2 employment.
3. Source-data freshness
2026 constants verified May 15, 2026 against:
- IRS Rev. Proc. 2025-32 (federal brackets, standard deduction, QBI thresholds).
- SSA Fact Sheet 2026 (Social Security wage base).
- IRS Notice 2026-10 (standard mileage rate).
- IRS Notice 2025-67 (retirement plan limits).
Reflects the One Big Beautiful Bill Act (OBBBA), signed July 2025. Quarterly review catches mid-year IRS revisions; full citations are in the public file /data/tax-constants-2026.json.
4. Calculation methodology
Self-employment tax: 15.3% applied to 92.35% of net Schedule C income, with the Social Security portion (12.4%) capped at the wage base of $184,500 for 2026 and the Medicare portion (2.9%) uncapped. Half of self-employment tax is deducted above the line. Federal income tax is calculated on taxable income after the standard or itemized deduction, the half-SE adjustment, and the QBI deduction. The calculator splits the annual estimate into four equal quarterly payments. Full math is documented in the Guide section of the home page.
5. Hidden W-2 costs methodology
The "What a W-2 employer covers invisibly" row uses sector-average employer contributions from the KFF Employer Health Benefits Survey 2024, Vanguard's How America Saves 2024 report, and the BLS National Compensation Survey 2023. Your specific employer's contributions may differ materially. Treat the figures as a baseline, not your personal number.
6. Break-even hourly rate methodology
The break-even card finds the 1099 gross income whose net take-home equals the W-2 side's "total compensation value" — wages plus employer-paid FICA, plus a typical 401(k) match, plus a typical employer health-premium share, plus a PTO equivalent. Both sides apply the standard deduction. Billable hours are assumed at 2,000 per year (40 hr × 50 weeks). Itemized deductions are excluded from the comparison because they would cancel between the two scenarios. Differences in actual benefit packages, available billable hours, and itemization can shift the answer significantly.
7. Affiliate disclosure
When this site links to a tax software product (such as TurboTax, FreshBooks, or QuickBooks) or other commercial service and we earn a commission, that link will be marked as an affiliate link. We never accept payment to favor a product in the calculator math or in the Guide content. Calculator output is identical regardless of any commercial relationship.
8. Updates
This Disclaimer may be updated as the law or our scope changes. The current version always lives at this URL with an effective date at the top.