W-2 vs 1099 Travel Nurse: The $6,480 Tax Difference Nobody Explains

Should you work as a W-2 employee or 1099 independent contractor? This question comes up constantly in travel nursing, and the answer involves a number most people don’t know: $6,480.

That’s how much more in taxes a 1099 contractor pays compared to a W-2 employee on $100,000 of income—the self-employment tax penalty that recruiters rarely mention.

The Core Difference: Self-Employment Tax

When you’re a W-2 employee, you pay 7.65% in FICA taxes (Social Security and Medicare). Your employer pays the other 7.65%.

When you’re a 1099 contractor, you pay both halves—the full 15.3%. That’s the self-employment tax.

The Math at $100,000

Wait, that’s even more than $6,480. The $6,480 figure accounts for the fact that 1099 workers can deduct half of their SE tax, which reduces the effective difference. But the point stands: 1099 status costs thousands more in employment taxes.

What 1099 Proponents Get Wrong

You’ll hear arguments like “1099 nurses get to deduct business expenses” or “the QBI deduction makes up for it.” Let’s examine these claims.

Claim 1: “Business Expenses Even It Out”

Yes, 1099 contractors can deduct legitimate business expenses:

• Mileage
• Scrubs and equipment
• Licensing fees
• CEU costs
• Health insurance

But W-2 employees have many of these covered by their employer, and travel expenses are often reimbursed tax-free. The “extra deductions” argument only works if you have significant unreimbursed expenses.

Reality check: Most travel nurses don’t have $7,000+ in unreimbursed business expenses.

Claim 2: “The QBI Deduction Is Huge”

The Qualified Business Income deduction allows self-employed people to deduct up to 20% of qualified business income. This can offset some of the SE tax penalty.

Example at $100,000:

• QBI deduction: ~$17,000 (after SE adjustments)
• Tax savings at 24% bracket: ~$4,080
• Still leaves ~$3,500 extra tax burden vs. W-2

And QBI has income limits that high-earning 1099 nurses can hit.

Claim 3: “1099 Pays Better”

This one can be true—but only if the gross rate is significantly higher. To break even after the SE tax penalty and lost benefits, a 1099 contract typically needs to pay 15-25% more than the equivalent W-2 position.

If W-2 pays $50/hour, 1099 needs to pay:

• $57-$62/hour just to break even
• Even more if you’re paying your own health insurance

When 1099 Actually Makes Sense

There are legitimate scenarios where 1099 status works:

1. Significantly Higher Gross Pay

If a 1099 contract pays 25%+ more than W-2 alternatives, the math may work out. This sometimes happens in:

• Crisis staffing situations
• Rural or hard-to-fill positions
• Direct facility contracts

2. Substantial Business Expenses

If you have legitimate business expenses of $10,000+ annually (rare for travel nurses), the deductions may close the gap.

3. Solo 401(k) Strategy

1099 contractors can contribute more to Solo 401(k) plans—up to $69,000 in 2026 (including profit sharing). For high earners focused on tax-deferred retirement savings, this is a real advantage.

4. You’re Legitimately Self-Employed

Some nurses operate as true independent contractors with their own business, multiple clients, and control over their work. This is different from being a de facto employee who’s been misclassified as 1099.

The Misclassification Problem

Here’s the uncomfortable truth: Many “1099” travel nursing arrangements are actually misclassification.

The IRS looks at factors like:

• Who controls your schedule?
• Who provides equipment and supplies?
• Who determines how the work is done?

If the agency/facility controls these factors, you should be W-2—regardless of what the contract says. Misclassification can result in:

• Back taxes owed by the agency
• Loss of unemployment eligibility for you
• Worker’s comp issues

Side-by-Side Comparison

Making the Decision

Choose W-2 If:

• You want tax simplicity
• You value employer-provided benefits
• The gross pay difference is under 15%
• You want unemployment eligibility
• You prefer predictable tax withholding

Consider 1099 If:

• The gross pay is 25%+ higher
• You have significant business expenses
• You want to maximize Solo 401(k) contributions
• You’re truly running an independent business
• You understand and accept the tax implications

Calculate Your Break-Even

Use our W-2 vs 1099 Calculator to see the exact difference for your situation. Enter your income, state, and expected deductions to get a personalized comparison.

The Bottom Line

For most travel nurses, W-2 status is financially better. The self-employment tax penalty is real and significant—roughly $6,500 per $100,000 of income.

1099 can make sense, but only when the gross pay is substantially higher OR you have specific financial strategies that benefit from self-employment (like maximizing Solo 401(k) contributions).

Don’t let a recruiter sell you on 1099 by emphasizing “higher pay” without showing you the full tax picture. Run the numbers yourself.

Key Takeaways:

• 1099 costs ~$6,480 more in SE tax at $100,000 income
• 1099 must pay 15-25% more to match W-2 take-home
• QBI deduction helps but doesn’t fully offset SE tax
• Most travel nursing positions should properly be W-2
• Always calculate net take-home, not just gross pay