Act on the result
Reconcile the federal wage basis and every state, local, benefit, insurance and contractor cost before choosing a delivery arrangement.
Educational only: Business decision support, not accounting, tax or legal advice.
Privacy: No account is required. Tool inputs and results stay in this browser. Anonymous categorical usage analytics send only governed page, tool, cluster and action identifiers; tool inputs and results are never sent. Error monitoring is disabled. Optional saved state stays only on this device.
Update policy: Reviewed when formulas or official dependencies change.
Scope: US small-business planning using your own assumptions.
What this comparison calculator helps you decide
Best for
US businesses comparing a confirmed loaded employee-cost scenario with contractor service cost without determining worker status.
Outputs
Federal employer FICA, loaded employee cost, productive-hour cost, contractor service cost, annual cost difference and break-even service rate.
Start here
Confirm the federal wage scope and commercial-comparison boundary, then enter state, local, benefit, insurance, leave and contractor costs.
Use a different tool when: Do not use this to determine worker classification, employment status, tax liability or legal compliance. Use US Total Employee Cost Planner to plan loaded employee cost without a contractor comparison; use this tool only after confirming the worker arrangement separately.
Profit & break-even
US Contractor vs Employee Cost: federal employer fica
Federal employer FICA, loaded employee cost, productive-hour cost, contractor service cost, annual cost difference and break-even service rate.
Worked example — not your result
This separate engine-derived example explicitly confirms all three comparison boundaries. The interactive calculator below begins unconfirmed and shows no result until you confirm them.
- Example employee annual cost
- $129,650.00
- Example contractor annual cost
- $145,000.00
- Example contractor-minus-employee spend
- $15,350.00
Example FUTA input: $0.00. No FUTA rate is inferred.
Employee and contractor cost records
Use one annual basis. Enter FUTA separately, then enter every state, local, benefit, insurance, leave and contractor cost that applies.
Your numbers stay in this browser
Entered annual salary and other cash pay.
Wages confirmed as subject to the supported 2026 federal employer FICA row.
Enter the annual FUTA cost from your payroll records or adviser. This tool does not infer a FUTA rate, wage base, credit or exemption.
User-entered state unemployment, local payroll taxes and similar employer costs.
User-entered health, pension-plan, workers compensation and other insurance costs.
Entered commercial service rate before any separately entered tax or engagement cost.
Hours bought under the same annual decision scenario.
Capacity, FICA scope and comparison boundariesOpen the assumptions you are less likely to change on every comparison.
User-entered equipment, software, recruiting, training and other applicable costs.
Paid weeks on the comparison basis.
Entered paid leave and holiday time removed from productive capacity.
Entered paid weekly hours; no federal or state hours rule is supplied.
Entered administration, training and other paid non-delivery time.
User-entered procurement, insurance, equipment, tax or administration costs paid by the business.
This tool compares entered business cost only and cannot determine worker status.
Use the automatic federal row only after confirming the entered wage basis is subject to it.
Confirm that the employee and contractor scenarios represent sufficiently comparable annual delivery scope before comparing spend.
Confirm that this is a commercial cost comparison, not a worker-classification request
Confirm the comparison before calculating
No initial result is inferred. Confirm the commercial-cost boundary, the supported FICA wage basis and sufficiently comparable annual delivery scope.
Outputs available after confirmationReview the governed result labels without inferring any values.
- Contractor minus employee annual cost
- Employee annual cost
- Federal employer FICA
- Employer Social Security
- Employer Medicare
- Employee productive hours
- Employee cost per productive hour
- Contractor annual service cost
- Contractor cost per purchased hour
- Break-even contractor service rate
Result unavailable
Correct the highlighted assumptions to recalculate.
Open this calculator with preset values
This calculator supports documented, shareable scenario URLs. Compatible assistants and applications can construct links using the parameters below.
Scenario links contain only allowlisted numeric and closed-choice inputs shown in the URL; Margin101 excludes free text and identifying fields. Anyone you share the URL with can read those numbers, so do not include private or identifying data.
| Parameter | Meaning | Unit | Allowed values | Presence | Default |
|---|---|---|---|---|---|
| annualBenefitsInsuranceCosts | User-entered health, pension-plan, workers compensation and other insurance costs. | USD/employee/year | 0 to 10000000 | Required | 15000 |
| annualCashPay | Entered annual salary and other cash pay. | USD/employee/year | 0 to 10000000 | Required | 100000 |
| annualContractorOtherCosts | User-entered procurement, insurance, equipment, tax or administration costs paid by the business. | USD/contractor/year | 0 to 10000000 | Required | 2500 |
| annualFederalUnemploymentTax | Enter the annual FUTA cost from your payroll records or adviser. This tool does not infer a FUTA rate, wage base, credit or exemption. | USD/employee/year | 0 to 10000000 | Required | 0 |
| annualFicaEligibleWages | Wages confirmed as subject to the supported 2026 federal employer FICA row. | USD/employee/year subject to supported FICA row | 0 to 10000000 | Required | 100000 |
| annualOtherEmployeeCosts | User-entered equipment, software, recruiting, training and other applicable costs. | USD/employee/year | 0 to 10000000 | Required | 3000 |
| annualStateLocalPayrollCosts | User-entered state unemployment, local payroll taxes and similar employer costs. | USD/employee/year | 0 to 10000000 | Required | 4000 |
| comparableDeliveryScopeCode | Confirm that the employee and contractor scenarios represent sufficiently comparable annual delivery scope before comparing spend. | — | 1 (Comparable annual delivery scope confirmed), 0 (Different or uncertain delivery scope — unsupported) | Required | Comparable annual delivery scope confirmed |
| comparisonScopeCode | This tool compares entered business cost only and cannot determine worker status. | — | 1 (Commercial cost comparison only), 0 (I need a classification decision — unsupported) | Required | Commercial cost comparison only |
| contractorPurchasedHours | Hours bought under the same annual decision scenario. | purchased contractor hours/year | 1 to 10000 | Required | 1500 |
| contractorServiceRate | Entered commercial service rate before any separately entered tax or engagement cost. | USD/contractor purchased hour | 0 to 100000 | Required | 95 |
| ficaScopeCode | Use the automatic federal row only after confirming the entered wage basis is subject to it. | — | 1 (Supported 2026 employer FICA wage basis confirmed), 0 (Exempt, special or uncertain treatment — unsupported) | Required | Supported 2026 employer FICA wage basis confirmed |
| nonProductiveHoursPerWorkingWeek | Entered administration, training and other paid non-delivery time. | non-productive paid hours/employee/working week | 0 to 167 | Required | 6 |
| ordinaryHoursPerWeek | Entered paid weekly hours; no federal or state hours rule is supplied. | paid hours/employee/working week | 1 to 168 | Required | 40 |
| paidLeaveWeeksPerYear | Entered paid leave and holiday time removed from productive capacity. | paid leave weeks/employee/year | 0 to 52 | Required | 3 |
| paidWeeksPerYear | Paid weeks on the comparison basis. | paid weeks/employee/year | 1 to 53 | Required | 52 |
US Contractor vs Employee Cost: federal employer fica
Use the result as a bounded business-cost comparison; it does not determine worker classification, status or tax treatment.
Formula summary
- Primary formula
- contractor annual service cost − loaded employee annual cost
Data used here
- US 2026 employer FICA components: Internal Revenue Service; verified; checked 2026-07-28.
Decision checks
Stress-test the decision
Retest contractor service rate and purchased hours separately while preserving the same annual scope.
Assumptions and sources
- US 2026 employer FICA components
- IRS Publication 15 (2026) Checked 2026-07-28.
Primary source →
When this estimate can be misleading
- This tool compares entered business cost only. It does not determine whether a worker is an employee or independent contractor.
- The automatic federal row is limited to supported 2026 employer Social Security and Medicare after the user confirms the wage basis.
- FUTA has its own user-entered annual-cost field; state unemployment, local payroll taxes, workers compensation, benefits and insurance are also user-entered and are never inferred.
- Paid leave, paid weekly hours and non-productive time are user-entered capacity assumptions, not federal or state entitlement defaults.
- The contractor scenario uses entered service rates, purchased hours and other business-paid engagement costs.
- Annual difference and parity-rate outputs require confirmation that the two scenarios represent sufficiently comparable annual delivery scope.
- The comparison excludes control, permanence, integration, equipment ownership, intellectual property, continuity, quality and other legal or operating differences.
- Use the result as a bounded business-cost comparison; it does not determine worker classification, status or tax treatment.
Educational estimate, not advice. See all assumptions & limitations →
Related reading
Guides to interpret the decision and its assumptions.
- Employee vs Contractor: Economics Before Classification
Compare like-for-like economics and operating trade-offs before a separate jurisdictional legal classification.
Read guide - US Total Employee Cost: Federal Components and Capacity
Reconcile the supported 2026 federal employer FICA base with explicit state, benefit and productive-capacity boundaries.
Read guide - US Service Pricing and Self-Employment Boundaries
Keep service-price recovery maths separate from worker status, self-employment tax and estimated-payment timing.
Read guide
Frequently asked questions
How do I compare an entered US employee cost scenario with an entered contractor service-cost scenario?
Reconcile the federal wage basis and every state, local, benefit, insurance and contractor cost before choosing a delivery arrangement.
Does this determine employee or independent-contractor status?
No. Classification depends on the actual facts and applicable law. This tool only compares entered business costs after you confirm that boundary.
Which US employer costs are automatic?
Only the supported 2026 federal employer Social Security and Medicare rows. FUTA has a separate annual input, and state, local, benefit, insurance and other costs remain explicit inputs.
Does Margin101 store salary or contractor rates?
Tool inputs and results stay in this browser. Anonymous categorical usage analytics send only governed page, tool, cluster and action identifiers; tool inputs and results are never sent. Error monitoring is disabled. Optional saved state stays only on this device.
Is this tax, employment or legal advice?
No. Verify classification, payroll, insurance and contract obligations with the relevant authorities and qualified advisers.
What should stay consistent when I compare the options?
Keep the time basis, units and included costs consistent across options, then verify the assumptions that create the largest difference.
How should I treat tax in this calculation?
Use the tax basis and rate shown by the tool, confirm that they fit the transaction and jurisdiction, and keep every input on one consistent basis.