Corp-to-Corp vs. W-2: which pays more?

A higher hourly rate on a Corp-to-Corp (C2C) contract doesn't automatically mean more in your pocket. The comparison only makes sense after you account for what each arrangement does and doesn't include.

What C2C includes — and doesn't

On C2C you're paid through your own incorporated business, usually at a higher rate. But you cover your own taxes (including the employer side), health insurance, retirement, paid time off, and accounting. Those add up.

What W-2 includes

As a W-2 employee, taxes are withheld and benefits are often provided. The headline rate is lower, but more of the total cost of employing you is already handled.

A simple rule of thumb

Many contractors estimate they need a meaningfully higher C2C rate to match an equivalent W-2 package once benefits and self-employment taxes are included. Run your own numbers — and confirm the tax specifics with an accountant. See our glossary for plain-language definitions of each term.