Physician Job Offer Comparison Calculator

A $420,000 1099 locum offer and a $350,000 W-2 hospital offer look like an obvious $70,000 difference. Once you account for self-employment tax (~$16K extra per year), malpractice OOP ($15K+/year), health insurance ($7,200/year out-of-pocket), lost employer retirement match ($14K/year), and a $35,000 malpractice tail bill if you leave — the 1099 offer may net you less over five years.

Enter both offers below. The calculator estimates Year 1 and 5-year net economic value using 2026 federal tax brackets.¹ Results are after taxes and OOP costs — the number that actually hits your account.

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What this calculator accounts for

For each offer the calculator computes:

• Gross cash: base + expected production bonus, plus Year-1 signing bonus (one-time).
• Employment taxes. For W-2 physicians, the employee-side FICA: 6.2% Social Security on the first $184,500 of wages (2026 SS wage base²) + 1.45% Medicare on all wages, plus 0.9% Additional Medicare Tax on wages above $200,000 single / $250,000 MFJ (IRC §3101(b)(2)³). For 1099 physicians, full self-employment tax: 15.3% on net SE earnings (gross × 0.9235) up to the SS wage base, then 2.9% Medicare-only above it, plus the 0.9% additional Medicare surcharge. The deductible half of SE tax (IRC §164(f)) is subtracted from AGI before computing income taxes.
• Federal income tax: Applied to AGI = gross compensation − standard deduction ($16,100 single / $32,200 MFJ for 2026¹) − deductible half of SE tax (if 1099). This is an estimate; it excludes itemized deductions, pre-tax 401(k) contributions, child tax credits, and AMT.
• State income tax: Flat rate on gross compensation. Use your actual marginal rate.
• Benefits costs and value: Health insurance OOP (monthly × 12), malpractice insurance annual OOP, CME/expense allowance, and employer retirement match.
• Malpractice tail: One-time cost deducted from the 5-year total — it comes due when you leave, not annually.

What this calculator does NOT include

• Your own pre-tax retirement contributions. Contributing to a 401(k)/403(b) or solo 401(k) reduces your taxable income and is a major lever — but it comes out of your gross pay either way and doesn't change the head-to-head comparison unless one offer allows much higher contribution limits. See the solo 401(k) note below for the 1099 advantage.
• PSLF impact. If one offer is at a qualifying 501(c)(3) nonprofit employer and you carry federal student loans, PSLF forgiveness could be worth $100,000–$300,000+ over 10 years — dwarfing most salary differences. Run our PSLF calculator before deciding.
• Non-compete economic cost. A restrictive non-compete can force a geographic move or below-market interim position if you leave early. This is an off-balance-sheet liability that can wipe out a salary premium. Our contract review guide discusses this by state.
• S-corp election for 1099 income. At roughly $80,000+ in net 1099 earnings, electing S-corp can reduce SE tax by $10,000–$30,000+ per year. Our S-corp savings calculator runs the exact math — this can significantly close the W-2 vs 1099 employment-tax gap at high income levels.
• Benefits-in-kind: vacation days, scheduling flexibility, academic time, CME days, administrative support. Real value — but not monetizable in a single number.
• Itemized deductions or progressive state taxes. States with progressive brackets (CA, NY, MN, OR) require analysis at your actual marginal rate, which is higher than a flat average at physician income levels.

The W-2 vs 1099 employment-tax gap explained

For a W-2 employed physician earning $350,000 (MFJ, 2026):

• You pay: SS (6.2% × $184,500) = $11,439 + Medicare (1.45% × $350,000) = $5,075 = $16,514 employee FICA
• Your employer also pays a matching $16,514 — their cost, invisible in your paycheck

For a 1099 physician at the same $350,000:

• Net SE = $350,000 × 0.9235 = $323,225
• SE tax: (12.4% × $184,500) + (2.9% × $323,225) = $22,878 + $9,374 = $32,252 SE tax
• Half-SE deduction: $32,252 / 2 = $16,126 off your AGI → saves roughly $5,960 in federal income tax at a 37% marginal rate
• Net SE tax cost after deduction: approximately $26,292 vs. $16,514 for W-2 = ~$9,778 more per year

The gap widens at higher income because the 2.9% Medicare portion has no cap. At $500,000 gross 1099, the additional SE tax vs W-2 FICA approaches $15,000–$18,000 per year. An S-corp election can significantly reduce this — see our S-corp calculator.

Negotiating from these numbers

Once you know which line items drive the 5-year gap, you can negotiate specifically:

• Malpractice tail: Ask for a "free tail" clause or occurrence policy. This is standard physician contract language and frequently granted — especially for specialties where tail is expensive. See our guide.
• Retirement match: Request a higher match percentage, or profit-sharing contribution. Partnership-track positions sometimes offer this as a buy-in sweetener.
• Signing bonus: One-time, often negotiable, and can close a Year-1 gap. Be aware of clawback periods — typically 1–3 years. Our signing bonus guide covers the tax math and clawback mechanics.
• SE tax premium on 1099: The gross comp on a 1099 offer needs to be roughly $10,000–$20,000 higher than a comparable W-2 to break even on employment taxes alone at physician income levels. Use this as a specific counter-offer anchor.