Career Capital & Comp Engineering

W-2 Salary vs. 1099 / S-Corp Net Yield Engine

2026 IRS statutory model factoring SE tax arbitrage, Solo 401(k) circular caps, QBI pass-through, and bench drag.

3-Year Net Wealth Delta

-$20,497

S-Corp vs. W-2 over 36 mos

1099 Breakeven Rate

$157/hr

Min rate to equal $164,616 net W-2

S-Corp vs. Sole Prop Arbitrage

+$2,541/yr

S-Corp FICA savings beat CPA drag

Hidden Friction Share

31.7%

Of gross 1099 lost to taxes, health & ops

1. W-2 Baseline Package

Base Salary ($)

Annual Bonus ($)

Annualized RSU/Equity ($)

401(k) Match (%)

Paid Time Off (Days)

Weekly Commute (Hrs)

2. Independent Consulting & Friction

Billable Rate ($/hr)

Billable Hrs / Week

Unbilled Admin Hrs/Wk

Bench / Unbilled Weeks

Health Ins. ($/yr)

Software/Ops ($/yr)

3. S-Corp & Tax Shelter Tuning

S-Corp Reasonable Salary Split (45%)$99,900 W-2 / $79,463 K-1

S-Corp CPA & Payroll ($/yr)

Blended Eff. Tax Rate (%)

Max Solo 401(k) ($72k Cap)Apply 20% QBI Deduction

Line Item (Annual)	W-2 Employee	1099 Sole Prop	1099 S-Corp
Gross Inflow + Match	$237,200	$231,000	$231,000
Health Ins, Ops & CPA Overhead	$0 (Employer Paid)	-$15,600	-$18,600
FICA / Self-Employment Tax	-$15,044	-$28,974	-$15,705
Pre-Tax 401(k) Sheltered	$31,700	$61,703	$49,475
Sec. 199A QBI Tax Deduction	$0	$27,842	$15,893
Income Tax (28% Eff.)	-$57,540	-$31,183	-$38,912
Total Net Economic Yield	$164,616	$155,243	$157,784
True Net Hourly Yield (incl. Commute/Admin)	$76.21/hr(2160 hrs/yr)	$88.21/hr(1760 hrs/yr)	$89.65/hr(1760 hrs/yr)

Sensitivity Driver: Why S-Corp vs. Sole Prop Flips

Lowering your S-Corp W-2 salary saves 15.3% FICA below the $184,500 Social Security cap (and 2.9%–3.8% Medicare above it), but simultaneously shrinks your 25% Employer Solo 401(k) ceiling and QBI base. Use the S-Corp Reasonable Salary slider on the left to find the exact inflection point for your billing rate.