Locum and 1099 rates: the conversion that makes them comparable to your salary

The rate prices an hour; the salary priced a year

An hourly locum rate and an annual salary measure different things, so the comparison starts by putting one into the other's unit. The rate pays for hours worked under the assignment. The salary paid for a year that included holidays, vacation, sick days, meetings and training. Converting means building an annual number out of hours that will be paid for.

The quickest version of that conversion is the one to distrust: multiply the hourly rate by 2,080, the hours a 40-hour week produces across 52 weeks, and read the product as a salary. That product assumes 52 paid weeks. But a locum schedule is bought in shifts or in weeks, and the weeks nobody books are weeks nobody pays for.

Build the denominator from the agreement instead. Count the shifts or weeks the assignment commits to, multiply by paid hours per shift, then take out what the rate does not cover: travel days that are not billable, licensing and credentialing time, continuing education, and the gaps between assignments. What remains is annual paid hours, and it is the only figure the rate should be multiplied by.

Self-employment tax moves both halves onto the rate

Both halves of Social Security and Medicare come out of a 1099 rate. Self-employment tax runs at a combined 15.3 percent, made up of 12.4 percent for Social Security and 2.9 percent for Medicare 1Ref 1Internal Revenue Service (2024).Self-employment tax (Social Security and Medicare taxes).The combined 15.3 percent self-employment tax rate (12.4 percent Social Security plus 2.9 percent Medicare) and the deduction of one half of that tax in figuring adjusted gross income.. On a W-2 the same total existed and was split, half withheld from the paycheck and half paid by the employer beside it. On a 1099 there is no second party, so the hour has to carry both halves.

The tax does not run on the whole of the profit. Schedule SE multiplies net earnings by 92.35 percent before the rate applies 2Ref 2Internal Revenue Service (2025).Schedule SE (Form 1040): Self-Employment Tax.The Schedule SE line math a rate conversion uses: net earnings multiplied by 92.35 percent, the 12.4 percent Social Security portion capped at the $176,100 wage base for 2025, and the uncapped 2.9 percent Medicare portion., a fixed step on the form itself, which no contract negotiates. Half of the tax that results is then deductible in figuring adjusted gross income 1Ref 1Internal Revenue Service (2024).Self-employment tax (Social Security and Medicare taxes).The combined 15.3 percent self-employment tax rate (12.4 percent Social Security plus 2.9 percent Medicare) and the deduction of one half of that tax in figuring adjusted gross income.. That deduction moves income tax and leaves the self-employment tax where it is.

The obligation starts low. Schedule SE and the tax attach once net self-employment earnings reach $400 for the year 3Ref 3Internal Revenue Service (2025).Instructions for Schedule SE (Form 1040) (2025).The $400 net-earnings floor that triggers the Schedule SE filing and self-employment tax obligation on even a small amount of locum work., which a single weekend of locum work clears. The floor is a filing trigger, and it changes nothing about the arithmetic above it.

Where the wage base and the extra 0.9 percent change the answer

The 15.3 percent does not apply flat across a whole year of income, and for a clinician adding locum work to a salaried job the difference is large. The Social Security portion, 12.4 percent, applies only up to $176,100 of combined wages and self-employment earnings for 2025, a ceiling that is set annually; the 2.9 percent Medicare portion has no ceiling at all 2Ref 2Internal Revenue Service (2025).Schedule SE (Form 1040): Self-Employment Tax.The Schedule SE line math a rate conversion uses: net earnings multiplied by 92.35 percent, the 12.4 percent Social Security portion capped at the $176,100 wage base for 2025, and the uncapped 2.9 percent Medicare portion..

Combined is the operative word. Wages already earned on a W-2 count toward that ceiling, so locum income stacked on a salaried year can sit entirely above it and carry only the Medicare portion. A full year of locum work with no wages underneath runs the other way, and the first $176,100 for 2025 carries both parts.

Above certain income a further tax starts. The Additional Medicare Tax adds 0.9 percent on combined wages and self-employment income over $200,000 for a single filer or head of household, $250,000 for a joint return, and $125,000 for married filing separately 4Ref 4Internal Revenue Service (2026).Questions and Answers for the Additional Medicare Tax.The 0.9 percent Additional Medicare Tax, its filing-status thresholds, and the combining of self-employment income with W-2 wages toward those thresholds.. The threshold that applies is the one attached to the return being filed.

So the same hourly rate converts differently for a clinician who leaves a salary in June than for one who has been on 1099 since January.

The withholding you no longer have

A salary paid its tax before the money arrived. A 1099 rate does not, so the same gross produces a different cash-flow year. Federal tax on locum income is generally paid in four estimated installments, commonly falling in mid-April, mid-June, mid-September, and on January 15 of the following year 5Ref 5Internal Revenue Service (2026).Estimated Taxes.The four estimated-tax installments that replace employer withholding on 1099 income, and the headline safe-harbor test.. That timing belongs in the comparison, because a rate that looks equivalent in April can be short in January.

There is a safe harbor, and it is arithmetic anybody can run. No penalty applies where the amount owed after withholding and credits comes to less than $1,000, or where payments equal the smaller of 90 percent of the current year's tax or 100 percent of the prior year's tax 5Ref 5Internal Revenue Service (2026).Estimated Taxes.The four estimated-tax installments that replace employer withholding on 1099 income, and the headline safe-harbor test.. That 100 percent becomes 110 percent once the prior year's adjusted gross income was more than $150,000 6Ref 6Internal Revenue Service (2026).Publication 505 (2026), Tax Withholding and Estimated Tax.The substitution of 110 percent for 100 percent of prior-year tax in the estimated-tax safe harbor once prior-year adjusted gross income exceeded $150,000., a line a full-time clinical salary can already have crossed.

Set the money aside as it arrives. A locum payment lands gross, and the share of it that belongs to the next installment is not available to spend in the meantime. Moving that share into a separate account on the day each payment clears is a common enough practice among contractors, and it turns the January installment into a transfer.

What the salary bought that the rate does not

The salary carried purchases that the rate now has to make. Health coverage, the retirement match, paid time off, disability and life cover, malpractice, licensure, continuing education and the payroll administration behind all of it sat inside the employed package at no visible cost. Each becomes a line with a quote attached, and the quotes are what a conversion runs on, not a percentage uplift borrowed from somewhere else.

But no single published figure says what that package was worth, and the conversion does not need one. A benefits summary names the health premium split, the match formula, and the disability and life coverage. A marketplace or broker quote prices the same health coverage bought alone.

Malpractice is the line that varies most by arrangement. Whether the assignment provides coverage, whether the policy is occurrence or claims-made, and who buys the tail are contract terms, and a rate quoted with coverage included is a different number from the same rate quoted without it. Take the carrier's own figure for the tail rather than the multiple that circulates as trade convention without a citation attached.

Paid time off is already handled in the denominator from the first section. Counting it again here subtracts it twice.

Whether the arrangement is a 1099 at all

Being paid on a 1099 does not by itself settle the classification. The IRS analysis runs on three groups of facts: behavioral control, financial control, and the type of relationship between the parties, and there is no set number or combination of factors that decides it either way 7Ref 7Internal Revenue Service (2026).Independent contractor (self-employed) or employee?.The three IRS classification factors (behavioral control, financial control, type of relationship) and the absence of any set number of factors that decides a contractor question.. Where a given assignment sits on those three is a question about facts, and the facts are in the agreement that was sent to you.

The answer changes the conversion. An employee's payroll tax is withheld and matched; a contractor prices both halves into the rate and remits them. Reading the agreement against the three factors before pricing the hour costs an evening. If the arrangement looks like employment on those facts, that belongs with a professional who can read the whole contract.

The worksheet, and the decision it does not make

The comparable number comes out in five moves, and every input is a document already in hand or obtainable. Annual paid hours times the contracted rate gives gross. From that, subtract self-employment tax computed the Schedule SE way, subtract the priced cost of replacing the benefits, and subtract the business expenses the assignment leaves you carrying. Compare what remains against what the salary deposited after its own withholding.

Two decisions often arrive in the same week and do not belong in the same arithmetic. What a locum rate is worth is a question about hours, taxes and replaced benefits. Whether opting out mid-career makes sense is a question about your own panel and your own enrollment, and no rate conversion answers it.

Run the finished worksheet with your CPA before signing, with the agreement's own numbers in front of both of you. The arithmetic here is the part that does not need an appointment. Which entity, which retirement vehicle and which election fit the result is the part that does.