A $220 hourly contract produces $407,000 of receipts at 1,850 paid hours. A $250,000 staff salary produces $250,000 of wages. Those arithmetic facts do not establish how close the offers are after costs and taxes.
Build the annual cash comparison
For the W-2 offer, list salary, employee insurance premiums, employee retirement contributions, and other costs you will pay. Record employer retirement contributions separately. Use the actual benefit summary rather than estimating every benefit at a fixed percentage of salary.
For the contract, multiply the rate by realistic paid hours. Subtract malpractice, unreimbursed business travel, licensing, accounting, and other cash costs. Include replacement health coverage and the retirement contributions you intend to fund. Then calculate household taxes for each option.
Paid time off needs careful handling. If the contractor's paid hours already exclude vacation, do not deduct an additional salary-equivalent vacation expense. Similarly, a standard mileage deduction is a tax allowance, not necessarily the cash you spent on the vehicle.
Put travel and time off into the comparison
Keep hours per shift, shifts per week, working weeks, business costs and travel time visible. Two offers with the same hourly rate can require very different amounts of your time. Compare the same period and assumptions before considering the household tax calculation.
For an illustrative before-tax example, $200 per hour × 10 hours × 3 shifts × 48 weeks produces $288,000 of gross receipts. Subtracting $100 of costs per working week and $1,200 of annual fixed costs leaves $282,000 before taxes and other costs. Two more weeks off reduces gross receipts to $276,000 and working-week costs to $4,600; the fixed $1,200 remains. The result is $270,200, a difference of $11,800. This assumes the work and its payments occur as planned.
If the schedule also requires two hours of travel each working week, include those hours when comparing pay for your time. Travel time is not itself an additional cash expense. Keep actual travel costs separate, and do not count them twice if they are already in your weekly costs.
In 1099 Ops, open Home → Compare offers & time off to explore the before-tax comparison. It does not replace the household tax, insurance or retirement review below, and its result is not spendable cash. New to the app? Start with one facility and one shift.
Check the tax assumptions
Sole-proprietor self-employment tax generally starts with 92.35% of business profit. The 12.4% Social Security portion uses the remaining $184,500 2026 wage base after that person's W-2 Social Security wages. Medicare is 2.9%, with a separate 0.9% Additional Medicare tax above the applicable combined-income threshold. IRS SE rules, SSA wage base, IRS Additional Medicare rules.
A deductible expense does not reimburse its cost. Nor does every deduction reduce both income tax and SE tax: personal retirement deductions, the eligible self-employed health-insurance deduction, and the QBI deduction follow different rules from Schedule C operating expenses.
Compare savings as well as cash
For 2026, the employee 401(k) deferral limit is $24,500 and the overall defined contribution limit is $72,000 before eligible catch-up contributions. Actual room depends on compensation and plan rules, and workplace plans can share that same overall ceiling. A SEP generally uses employer contributions; it is not the same employee-plus-employer structure as a Solo 401(k). IRS retirement limits, IRS one-participant plans.
Keep two results: cash left after taxes and funded contributions, and money added to retirement accounts. That makes it possible to compare both current spending and savings without counting the same dollar twice.
Test the less favorable months
Reduce billable hours for a canceled contract, delayed credentialing, or illness. Add realistic payment delays. A contract that works only at a fully booked schedule may not meet your cash needs.
Use the federal income preview for an initial comparison. Review state and local taxes, benefits, deductions, and any proposed S-corporation with your adviser. The NP comparison includes a transparent cash-cost table you can adapt to your own offer.