1099 vs W-2 in Texas (2026)

Federal gap (same math, every state)

Worked offer: $95,000 salary, $9,000 employer health, 4% match, 30 billable hours per week, 46 billable weeks — the same example as the national 1099 vs W-2 calculator.

• Employer FICA on the W-2: $7,268
• True W-2 cost (salary + employer FICA + health + match): $115,068 (1.21× the headline salary)
• Break-even 1099 rate: $83/hr on 1,380 billable hours
• SE tax if you billed that gross as profit with no expenses: about $16,259 (15.3% × 92.35%; real contractors deduct expenses first)

PTO is already inside the salary. Counting it again as extra dollars is the usual error; unpaid time off is captured by billing 46 weeks instead of 52.

1099 vs W-2 when the state line is $0

In Texas the state income-tax comparison between a W-2 offer and a 1099 contract is a wash: both are $0. The remaining gap is federal — employer-paid FICA and benefits on the W-2 side versus self-employment tax, health insurance you buy yourself, and no 401(k) match on the 1099 side.

Texas is not one of the nine jurisdictions with a lower 1099-K reporting threshold. Expect a federal 1099-K only above $20,000 and 200 transactions. Income is still taxable federally without the form. There is no Texas personal return to attach it to.

If you form a Texas LLC, franchise/margin tax may apply above the Comptroller’s revenue threshold. That cost sits on the 1099/entity side only. A W-2 employee does not file it. Price it as a compliance cost, not as a “Texas income tax rate” in the vs calculator — leave the flat state % at 0 so the comparison stays honest.

Federal 1099-K only: more than $20,000 and more than 200 transactions. This state is not one of the nine lower-threshold jurisdictions. Check it with the 1099-K threshold checker (state pre-selected when Texas has a special rule).

Source note: No Texas personal income tax on wages or Schedule C profit.

State % to type into the vs calculator

The vs tool applies one flat % to W-2 wages and to 1099 gross so the compare stays symmetric. For Texas we suggest 0.00% as a planning figure at a ~$95,000 income — derived from STATE_RATES_2026 (no income tax), except Ohio W-2 which uses the hub’s ~2.75% individual rate rather than the BID. Open 1099 vs W-2 with Texas filled in.

QBI (20% of qualified business income, with 2026 thresholds) only exists on the 1099 side and is not in the simple vs rate. Use the all-in-one estimator when QBI or locals decide the offer.

Classification is not a calculator output

Whether a role may be 1099 is a legal test (federal common-law plus any state overlay). PiggyMath prices the tax difference if you are paid as a contractor. It does not decide worker status, issue Form SS-8, or e-file.

Expenses, QBI, and the Texas line

The break-even rate above assumes the contractor bills $115,068 with $0 expenses and no QBI. Real 1099 work deducts software, home office, mileage, and health insurance (the self-employed health insurance deduction). Those cut SE tax and federal income tax; Texas may or may not conform. PiggyMath’s state model does not apply a full Texas return — it applies STATE_RATES_2026 (no income tax) to a profit proxy.

QBI can drop federal income tax by up to 20% of qualified profit below the 2026 thresholds. It does not reduce SE tax. It does not automatically reduce Texas tax. Price QBI in the QBI calculator and the estimator set to TX, not as a haircut to the vs tool’s hourly rate.

1099-NEC $2,000 vs what Texas still taxes

For 2026 a client generally issues Form 1099-NEC only above $2,000. A Texas client who pays you $1,500 may send nothing. You still have federal SE tax on the profit ($212 at $1,500 with no expenses) and, unless Texas has no personal income tax, a state line on that same profit. The 1099-K rule for this state: Federal 1099-K only: more than $20,000 and more than 200 transactions. This state is not one of the nine lower-threshold jurisdictions.

Keep invoices even when no form arrives. Texas Comptroller of Public Accounts (franchise / margin tax only) can still ask how you computed the number on the return. PiggyMath does not e-file and does not store your inputs.

Frequently asked questions