How 1099 Taxes Work

When a client pays you on a Form 1099-NEC, no one withholds tax from your pay. You are responsible for two federal taxes. Self-employment tax is Social Security and Medicare, covering both the employee and employer halves. Federal income tax is charged on your profit after deductions. Most states also tax that income.

How this calculator estimates your taxes

Net self-employment income = 1099 income − business expenses.
Self-employment tax base = net income × 92.35%.
Self-employment tax = 12.4% Social Security on the base up to $184,500, plus 2.9% Medicare on the full base. If the base is under $400, no self-employment tax is due.
Federal taxable income = net income − half of your self-employment tax − the 2026 standard deduction ($16,100 single, $32,200 married filing jointly, $24,150 head of household).
Additional Medicare Tax = 0.9% of the self-employment tax base above $200,000 (single or head of household) or $250,000 (married filing jointly). It is not included in the deductible half.
Federal income tax is calculated with the 2026 IRS tax brackets (10% to 37%) for your filing status.
State tax (optional) is your net income multiplied by a single approximate rate for the state you pick. It is a rough estimate, not a calculation using your state's actual brackets.

2026 self-employment tax rates

Tax	Rate	Applies to
Social Security	12.4%	First $184,500 of earnings
Medicare	2.9%	All earnings
Additional Medicare	0.9%	Earnings over $200,000 single or head of household / $250,000 joint

Example: $80,000 of 1099 income

Say you are a single filer with $80,000 of 1099 income and $10,000 of business expenses, and no state tax is selected. Your net self-employment income is $70,000, and the tax base is $64,645. Self-employment tax is $9,890.69. After deducting half of it ($4,945.34) and the $16,100 standard deduction, your federal taxable income is $48,954.66. That produces about $5,626.56 of federal income tax. Total estimated federal tax is about $15,517, or 19.4% of gross 1099 income.

What this estimate does not include

Qualified business income (QBI) deduction. Many self-employed people can deduct up to 20% of qualified business income. It is not applied here, so your federal income tax may be overstated if you qualify.
Other income. This includes W-2 wages (which also count toward the Social Security wage base and the Additional Medicare threshold), a spouse's income, investment income, and tax already withheld.
Credits and other deductions. For example, the child tax credit, itemized deductions, self-employed health insurance, and SEP-IRA or solo 401(k) contributions.
Actual state and local tax rules. The state figure uses one flat approximate rate per state and ignores state deductions, credits and city or county taxes.

Quarterly estimated tax payments

If you expect to owe at least $1,000 in federal tax for the year after withholding and credits, the IRS generally expects you to pay during the year with Form 1040-ES. The 2026 due dates are April 15, June 15 and September 15, 2026, and January 15, 2027. You generally avoid an underpayment penalty if you pay at least 90% of your 2026 tax, or 100% of your 2025 tax (110% if your 2025 adjusted gross income was over $150,000). The quarterly figure in the calculator simply divides your estimated total tax by four.

Frequently Asked Questions

What is self-employment tax?

Self-employment tax is Social Security (12.4%) and Medicare (2.9%), a combined 15.3%. W-2 employees split these taxes with their employer. Contractors pay both halves. It applies to 92.35% of your net self-employment income after business expenses. You report it on Schedule SE and can deduct half of it when figuring federal income tax.

How much should I set aside for taxes on 1099 income?

It depends on your profit, filing status, state and other income. Enter your numbers above and use the "Effective Total Rate" as a starting point. In the $80,000 example above, estimated federal tax is about 19.4% of gross 1099 income before any state tax. Your actual rate may be lower if you qualify for the QBI deduction or credits.

Is self-employment tax the same as income tax?

No. Self-employment tax funds Social Security and Medicare and is owed when your net earnings from self-employment (92.35% of your profit) are $400 or more, even if you owe no income tax. Federal income tax is a separate tax on your taxable income after deductions. This calculator shows both separately.

Do I need to pay quarterly estimated taxes?

Usually, if you expect to owe $1,000 or more in federal tax after withholding and credits. Underpaying can lead to a penalty. Use Form 1040-ES to work out your payments, and pay through IRS Direct Pay, EFTPS or your IRS online account.

Can I deduct business expenses?

Yes. Ordinary and necessary business expenses reduce your net self-employment income, which lowers both self-employment tax and income tax. Examples include software, equipment, business use of a vehicle or home office, and professional fees. Sole proprietors report income and expenses on Schedule C.

Does this calculator include state taxes?

Only as a rough estimate. If you choose a state, the calculator multiplies your net income by one approximate rate for that state. It does not use state tax brackets, deductions, credits or local taxes. Choose "No State Tax" to see federal taxes only.

What is the self-employed health insurance deduction?

If you qualify, you can deduct health insurance premiums for yourself, your spouse and dependents on Schedule 1 of Form 1040. It reduces income tax but not self-employment tax. This calculator does not include it.

How is a 1099 contractor taxed differently from a W-2 employee?

An employer withholds income tax and the employee half of Social Security and Medicare from each W-2 paycheck, and pays the other half itself. As a 1099 contractor you pay both halves yourself and make your own estimated payments. To compare, try the W-2 Tax Calculator.

1099 Tax Calculator for 2026