Topics
Financial concepts explained in plain English, with links to calculators and official sources.
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.
Applies to: 2025
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.
Applies to: 2025
Income Tax Brackets
The U.S. federal income tax uses seven progressive brackets with rates from 10% to 37%. Each bracket rate only applies to the income within that range — not to your entire income.
Applies to: 2025