Benefits Replacement Cost Calculator
Add up what you now pay yourself for health coverage, retirement match, PTO, and payroll tax that an employer used to cover.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This calculator adds up what a freelancer now pays out of pocket for the benefits a job typically bundles into a salary: health insurance premiums, a retirement plan match, paid time off, and the employer half of Social Security and Medicare tax. The total shows the hidden cost of being 1099 instead of W-2 — a number worth building into any freelance rate, since it rarely shows up until tax time or an unpaid sick week.
The formulas
- Net income (guarded)
- max(0, net freelance income)
- Extra payroll tax
- (min(net income, $184,500) × 6.2%) + (net income × 1.45%)The employer half of FICA a freelancer now covers: Social Security (6.2%) applies only up to the $184,500 (2026) wage base, while Medicare (1.45%) applies to all earnings. Below the wage base this equals a flat 7.65%. One-half of self-employment tax — this employer half — is itself deductible above the line, so the true after-tax cost is somewhat lower.
- Total self-funded benefits
- health premiums + retirement match lost + PTO value + extra payroll taxEach input is floored at zero before summing.
- As a share of income
- total ÷ net incomeReturns 0 when net income is 0 or less, so the tool never divides by zero.
- Per month
- total ÷ 12
Worked example
- Take the defaults: $12,000 in self-paid health premiums, a $5,000 lost employer retirement match, $6,000 of lost PTO value, and $100,000 of net freelance income.
- Extra payroll tax = ($100,000 × 6.2% Social Security) + ($100,000 × 1.45% Medicare) = $6,200 + $1,450 = $7,650 — the employer half of FICA a freelancer now covers. (At $100,000 the income is below the $184,500 Social Security wage base, so the full 7.65% applies; above the wage base only the 1.45% Medicare half keeps growing.)
- Total = $12,000 + $5,000 + $6,000 + $7,650 = $30,650 a year in benefits this freelancer now funds alone.
- That is $30,650 ÷ 12 = about $2,554.17 a month, or $30,650 ÷ $100,000 = 30.65% of net income.
Rates, benchmarks & sources
- The 7.65% employee/employer FICA split (6.2% Social Security + 1.45% Medicare) used for the extra-payroll-tax term — SSA (2025-10-24); IRS; PayrollOrg (2026)
- The employer/employee FICA split that a freelancer covers both sides of through self-employment tax — IRS Publication 15 (Circular E), Employer’s Tax Guide
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- This is a comparison estimate, not tax or financial advice — it does not calculate actual self-employment tax owed (use the Self-Employment Tax calculator for that).
- Health premiums, retirement match, and PTO value are manual inputs you supply; the tool does not look up your actual plan cost, employer match formula, or accrued leave balance.
- It only models the employer-paid FICA half as the payroll-tax cost; it does not include FUTA/SUTA, workers’ comp, or other employer-side costs covered elsewhere (see the True Cost of Employee calculator).
- The Social Security portion (6.2%) is capped at the annual wage base ($184,500 for 2026) while Medicare (1.45%) is uncapped, so above the wage base the payroll-tax term grows more slowly. This term is also a pre-tax figure: one-half of self-employment tax is deductible above the line, so your true after-tax cost is somewhat lower.
- State-specific benefits mandates (e.g., state disability or paid-leave insurance some employers fund) are not included.
Frequently asked questions
What benefits do freelancers have to replace themselves?
The big ones a job typically provides: health insurance premiums (often subsidized), a retirement plan match, paid time off, and the employer’s half of Social Security and Medicare payroll tax. Added together they commonly run well beyond what a headline salary comparison shows, which is why a freelance rate needs to price them in.
Why does the employer’s payroll tax count as a cost to me?
Employees and employers each pay 7.65% toward Social Security and Medicare. As a freelancer you pay both halves yourself through self-employment tax, so the 7.65% an employer would have covered is a real extra cost — this calculator applies it to your net income.
How does this compare a freelance rate to a salary?
It shows why matching a salary takes more than matching the dollar figure. If a $100,000 job came with tens of thousands of dollars of benefits, a freelancer needs meaningfully more than $100,000 of net income to be in the same position — before accounting for irregular income or unpaid admin time.
Where do I get a number for the value of paid time off I lost?
Multiply the days off you want by your day rate — desired days off times day rate. If you already use the PTO / Sick Day Banking calculator, carry its result straight into this field so the total reflects the paid time off you no longer receive automatically.
Does this estimate include state income tax or state-specific benefits?
No. The extra-payroll-tax term is limited to the federal FICA split, and state-run benefit programs some employers fund are not modeled. Treat the total as a federal, employer-benefits estimate you can layer state-specific costs on top of.