Is this true even after taking payroll taxes into account?
Antonio D'souza

Generally, yes. 1099 workers pay up to twice as much as W2 employees in Social Security and Medicare taxes, which accounts for most of the disparity. 1099 workers have an easier time deducting work expenses, and there are some loopholes there, but it is quite rare for a W2 employee to have a higher effective tax rate than a 1099 contractor who made the same amount of pre-tax income.

Contractors are on the hook for 100% of payroll taxes, whereas W2 employees generally expect that tax burden to be shared 50/50 by the company.

But there is some controversy surrounding companies finding ways to pay less than half of those taxes. One example is using wage suppression to effectively lower the company’s tax burden.