C2C to W2 Rate Calculator
Estimate your equivalent W2 hourly rate and annual salary based on a Corp-to-Corp (C2C) offer.
How to Calculate W2 Rate from C2C Rate
When transitioning from a Corp-to-Corp (C2C) contract to a W2 employment position, many IT professionals and consultants find it difficult to compare the two "apples-to-apples." A $100/hr C2C rate is not the same as a $100/hr W2 rate because of the "employer burden."
To calculate the W2 rate from a C2C rate, you must subtract the costs that an employer typically covers for a W2 employee but which a C2C contractor must pay themselves. This is known as the Burden Rate.
The Conversion Formula
The standard formula used by recruiters and hiring managers is:
What is Included in the Burden Rate?
The burden rate usually ranges from 20% to 35%, depending on the quality of benefits. Key components include:
- Employer Payroll Taxes: 7.65% for FICA (Social Security and Medicare).
- Unemployment Insurance: FUTA and SUTA taxes.
- Paid Time Off (PTO): Holidays, vacation days, and sick leave (usually 3-4 weeks/year).
- Health Insurance: Employer contributions to medical, dental, and vision plans.
- Retirement Benefits: 401(k) matching contributions.
- Administrative Costs: Workers' compensation and general liability insurance.
Realistic Example
If you are currently earning $100 per hour on C2C and you want to find the W2 equivalent with a standard 25% burden rate:
| Metric | Calculation | Result |
|---|---|---|
| C2C Hourly Rate | Input Value | $100.00 |
| Burden Deduction (25%) | $100 × 0.25 | $25.00 |
| Equivalent W2 Rate | $100 – $25 | $75.00/hr |
| Equivalent Annual Salary | $75 × 2080 hrs | $156,000 |
Why is C2C usually higher?
Companies pay more for C2C contractors because they have zero liability for benefits, no long-term employment commitment, and lower administrative overhead. As a C2C contractor, you are your own employer, meaning you pay both the employee and employer portions of taxes (Self-Employment Tax), and you must fund your own insurance and retirement.