Employee Salary Calculator

Unemployment insurance is funded by employer-paid taxes (SUTA/FUTA) on W-2 employee wages. Since independent contractors and self-employed workers don't have an employer paying into the system on their behalf, they are not covered by regular state unemployment programs. There are limited exceptions: • **Misclassification**: If you were classified as a contractor but should have been a W-2 employee (based on the ABC test or common-law test), you may be able to file a claim. The state will investigate the employment relationship. • **Mixed employment**: If you had W-2 employment AND do contract work, you may qualify based on your W-2 wages. Your contract income would then be reported as partial earnings. • **PUA (expired)**: The federal Pandemic Unemployment Assistance program (2020–2021) temporarily covered self-employed workers, but this program has ended. If you're deciding between taking a contract role vs. an employee role, this is an important financial consideration — employee positions include unemployment insurance as part of the compensation package, while contract roles do not.

The key insight is that your contractor gross income is not comparable to an employee salary. You need to subtract self-employment tax (15.3%) and business expenses first, then compare the result to a salary. But even then, the salary is worth more because the employer adds benefits on top — health insurance, retirement matching, PTO, and their half of FICA taxes.

Beyond the pure math, employment offers stability (no gaps between contracts), unemployment insurance eligibility, easier mortgage qualification, and reduced administrative burden (no quarterly taxes, invoicing, or client acquisition). These non-financial factors have real value that the calculator can't fully capture.

Typical benefit values for a $120,000 salary: health/dental/vision insurance ($8,000-$20,000 employer portion), 401(k) match at 3-6% ($3,600-$7,200), 15-25 days PTO ($7,000-$11,500), employer FICA ($9,180), plus disability insurance, life insurance, and professional development. Total: $28,000-$48,000 on top of base salary.

Consider a contractor grossing $150,000. After 15.3% SE tax (~$19,400) and $7,500 in expenses, net income is ~$123,100. An employee earning $120,000 salary receives: employer FICA ($9,180), health insurance ($12,000), 401(k) match ($4,800), and 20 days PTO ($9,200) — total compensation of ~$155,000. The lower salary actually delivers more total value.