Contractor vs Employee at $120k: Which Pays More?

Earning $120k puts you in the 30% marginal bracket with a marginal rate of 30% for 2026-27. As an employee, your employer handles PAYG withholding, super guarantee (12%), and payroll tax — but you have limited deductions. As a contractor invoicing at roughly $500/day, you can claim legitimate business expenses ($6,000+ for home office, equipment, and professional development), but you're responsible for your own super, insurance, and leave entitlements.

At this income level you must register for GST, which means charging 10% on top of your invoices and remitting it quarterly via a BAS. The comparison below models both scenarios with identical gross income so you can see exactly where the money goes — tax, super, GST obligations, and deductible expenses — and what lands in your pocket after everything is accounted for.