The gross hourly rate billed to the client/agency.
Weeks for vacation, holidays, and sick days (unpaid in C2C).
Health insurance, liability insurance, accounting fees, software, 401k matching.
Portion of FICA taxes an employer usually pays (Social Security & Medicare).
Gross C2C Annual Revenue:$0.00
Less: Annual Expenses/Benefits:-$0.00
Less: Employer Tax Adjustment:-$0.00
Equivalent W2 Salary:$0.00
Equivalent W2 Hourly Rate:$0.00
function calculateW2Equivalent() {
// 1. Get Inputs
var rateInput = document.getElementById("c2cHourlyRate").value;
var vacationInput = document.getElementById("vacationWeeks").value;
var expensesInput = document.getElementById("annualExpenses").value;
var taxBurdenInput = document.getElementById("taxBurden").value;
// 2. Parse numbers
var rate = parseFloat(rateInput);
var vacationWeeks = parseFloat(vacationInput);
var expenses = parseFloat(expensesInput);
var taxPercent = parseFloat(taxBurdenInput);
// 3. Validation
if (isNaN(rate) || rate <= 0) {
alert("Please enter a valid C2C Hourly Rate.");
return;
}
if (isNaN(vacationWeeks)) vacationWeeks = 0;
if (isNaN(expenses)) expenses = 0;
if (isNaN(taxPercent)) taxPercent = 7.65;
// 4. Logic
// Standard W2 year is usually calculated on 2080 hours (40hrs * 52wks)
var standardW2Hours = 2080;
// C2C Billable hours = Standard hours – (Vacation Weeks * 40 hours)
// Since C2C doesn't get paid for holidays or vacation, we must subtract this from potential revenue.
var billableHours = standardW2Hours – (vacationWeeks * 40);
// Gross C2C Revenue
var grossRevenue = rate * billableHours;
// Calculate the "Employer Portion" of taxes that the contractor pays themselves.
// Usually calculated on net business income, but for estimation, we apply to Gross – Expenses.
var taxableBasis = grossRevenue – expenses;
var employerTaxAmount = taxableBasis * (taxPercent / 100);
// Equivalent W2 Salary
// This is the money left over after paying business expenses and the extra taxes an employer would usually cover.
var w2EquivalentSalary = grossRevenue – expenses – employerTaxAmount;
// Equivalent W2 Hourly
// W2 hourly is usually Salary / 2080 (regardless of vacation taken, as W2 vacation is paid)
var w2EquivalentHourly = w2EquivalentSalary / standardW2Hours;
// 5. Display Results
document.getElementById("resGrossC2C").innerHTML = "$" + grossRevenue.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resExpenses").innerHTML = "-$" + expenses.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resTax").innerHTML = "-$" + employerTaxAmount.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resW2Salary").innerHTML = "$" + w2EquivalentSalary.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resW2Hourly").innerHTML = "$" + w2EquivalentHourly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("results").style.display = "block";
}
Convert C2C Rate to W2: A Comprehensive Guide
When transitioning from a full-time employee (W2) role to an independent contractor or Corp-to-Corp (C2C) arrangement, the hourly rate can be misleading. A $100/hr C2C rate is not equivalent to a $100/hr W2 rate. This calculator helps you determine the "apples-to-apples" equivalent salary by accounting for the hidden costs of self-employment.
Why C2C Rates Must Be Higher
In a standard W2 employment relationship, the employer bears significant costs beyond your gross salary. When you switch to C2C, you become the company. This means you inherit the following financial responsibilities:
Employer Payroll Taxes: W2 employees only pay half of FICA (Social Security and Medicare). Contractors must pay both the employee and employer portions (Self-Employment Tax), effectively doubling this tax burden (approx. an extra 7.65%).
Health Insurance & Benefits: Employers often subsidize health, dental, and vision insurance. As a C2C contractor, you pay 100% of these premiums.
Unpaid Time Off: W2 employees typically get paid holidays, sick leave, and vacation. C2C contractors only earn money when they work. If you take 2 weeks of vacation and observe 10 federal holidays, that is nearly a month of unpaid time.
Operational Overhead: You are responsible for liability insurance, accounting fees, legal fees, and hardware/software costs.
How to Use This Calculator
To get an accurate comparison, input your target C2C Hourly Rate. Then, estimate your annual costs:
Unpaid Weeks Off: Combine your desired vacation weeks with federal holidays (usually 2 weeks vacation + 2 weeks holidays = 4 weeks).
Annual Expenses: Sum up the cost of purchasing your own health insurance, liability insurance, and 401k matching contributions you would otherwise receive from an employer.
Tax Burden: We default this to 7.65% to represent the employer-side FICA tax that you now have to pay yourself.
Comparison: C2C vs. W2
Category
W2 (Employee)
C2C (Contractor)
Tax Withholding
Employer withholds tax
You pay estimated taxes quarterly
FICA Tax
Pays ~7.65%
Pays ~15.3% (Employee + Employer)
Benefits
Provided/Subsidized
Paid 100% out of pocket
Job Security
Higher
Lower (contracts can end abruptly)
The General Rule of Thumb
While this calculator provides a precise breakdown based on your inputs, a common rule of thumb in the IT and consulting industry is that your C2C rate should be roughly 30% to 40% higher than your desired W2 hourly rate to maintain the same standard of living. For example, if you earn $60/hr as an employee, you should target at least $80-$85/hr on a C2C basis.