Find your true take-home pay as a freelancer or contractor vs. a traditional employee, after taxes and benefits.
The W-2 true value includes your salary plus the dollar value of benefits your employer provides — 401k match, health insurance subsidy, and PTO (valued at your daily rate). The self-employed take-home starts with gross revenue, subtracts business expenses, subtracts self-employment tax (15.3% on top of regular income tax), and subtracts the full cost of your own health insurance.
The often-overlooked cost in freelancing is self-employment tax — as a W-2 employee, your employer pays half your Social Security and Medicare tax automatically. As self-employed, you pay both halves yourself.
The "1.3–1.5x rule": A common rule of thumb is that you need to earn 1.3 to 1.5 times your W-2 salary as a freelancer to land at the same true take-home pay, once you account for self-employment tax, your own health insurance, no PTO, and inconsistent income.
Beyond the math: flexibility and autonomy have real value that's hard to quantify. Income instability has a real cost too — even if the average works out favorably, unpredictable cash flow creates financial stress that a steady paycheck doesn't.