What is the primary difference between a W-2 and a 1099-NEC tax form?

A W-2 employee has income taxes, Social Security, and Medicare taxes withheld from each paycheck by the employer, who also pays the employer's share of Social Security and Medicare taxes. A 1099-NEC recipient is treated as an independent contractor running their own business, which means no taxes are withheld and they must pay self-employment tax of 15.3% on net earnings (covering both the employee and employer portions of Social Security and Medicare), in addition to regular income tax. The self-employment tax burden is a significant financial difference that independent contractors must plan for carefully.