Daily Rate vs. Salary: What You Actually Take Home
When comparing a contract daily rate to a salaried position, the gross numbers can be misleading. A $350/day contractor rate sounds like $7,700/month — but self-employment tax (15.3%) bites into that significantly. A $6,000 salary employee only pays 7.65% in employee FICA, since the employer covers the other half.
This calculator converts your daily rate to a monthly gross, then estimates take-home pay for both arrangements so you can make an accurate comparison. Income tax rates vary by bracket and aren't included here — focus on the FICA/SE tax difference as the primary driver.
Beyond taxes, salaried employment typically includes employer-sponsored health insurance, retirement matching, paid time off, and job security. These benefits can be worth $5,000–$15,000 per year in equivalent value — factor them in when comparing offers.
If you're a contractor evaluating a full-time offer, use this calculator to find the salary that would leave you equally well off after the tax difference is accounted for.
Frequently Asked Questions
To net the same take-home as a $6,000/month W-2 salary, your daily rate needs to generate roughly 10-15% more gross income to cover the extra self-employment tax. As a rule of thumb, contractors typically need 1.3-1.5x the equivalent salary rate to break even after taxes and self-funded benefits.
Yes. As a contractor, you can deduct business expenses (home office, equipment, software, mileage) to reduce your net self-employment income. This is one of the advantages of contractor status that can partially offset the higher self-employment tax rate.