PTO Value
Paid time off (PTO) includes vacation days, sick days, and sometimes personal days. Its value equals your daily salary rate multiplied by the number of PTO days. As a contractor, every day you don't work is a day you don't earn — so PTO has direct financial value when comparing employment offers.
Example
An employee earning $120,000/year with 20 PTO days: daily rate = $120,000 ÷ 260 working days = $462/day. PTO value = 20 × $462 = $9,231 in compensation the contractor equivalent doesn't receive.
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Contractor vs Employee Compensation
Contractors typically need to charge 40-70% more per hour than the equivalent employee hourly rate to achieve comparable take-home pay, because they cover self-employment tax (15.3%), health insurance, retirement, PTO, and business expenses themselves.
Employee Salary Equivalent
An employee salary that matches your contractor income is typically 25-40% lower than your contractor gross, because the employer covers half of FICA taxes, provides benefits, and gives paid time off that you currently fund yourself.