Calculate exactly how much you owe in self-employment tax, federal income tax, and state tax — plus your quarterly estimated payment amounts.
As a freelancer or independent contractor, you pay 15.3% self-employment tax (Social Security + Medicare) on 92.35% of your net income — because you're both the employee and the employer. You also owe federal and state income taxes, paid quarterly. The good news: you can deduct half your SE tax and all legitimate business expenses.
SE tax applies to 92.35% of net self-employment income. Half of SE tax is deductible from federal income. State tax is estimated from 2026 state brackets, deductions, and exemptions. For complex situations, consult a CPA.
| Gross 1099 Income | $0 |
| Business Expenses | $0 |
| Additional Deductions | $0 |
| Net Self-Employment Income | $0 |
| Self-Employment Tax (15.3%) | $0 |
| ↳ Social Security (12.4% on 92.35%) | $0 |
| ↳ Medicare (2.9% on 92.35%) | $0 |
| Half SE Tax Deduction (above-the-line) | $0 |
| Standard Deduction | $0 |
| QBI Deduction (20% of business income) | $0 |
| Federal Taxable Income | $0 |
| Federal Income Tax | $0 |
| State Income Tax | $0 |
| Total Tax | $0 |
| Net Take-Home Pay | $0 |
At the same income level, W-2 employees pay less FICA because their employer covers half.
Extra FICA cost of being 1099: $0 per year. Factor this in when negotiating your 1099 rate vs. a W-2 offer.
If your business is taxed as an S corporation, you pay yourself a salary (which owes Social Security and Medicare tax) and take the rest of the profit as distributions (which don't). This compares both setups using the profit you entered above. Adjust the two assumptions to match your situation.
| Sole prop | S corp | |
|---|---|---|
| Self-employment / payroll tax | $0 | $0 |
| Federal income tax | $0 | $0 |
| State income tax | $0 | $0 |
| S-corp running costs | — | $0 |
| Total taxes and costs | $0 | $0 |
| Take-home | $0 | $0 |
Both columns follow the QBI setting above. The 20% qualified business income (QBI) deduction is worth less to an S-corp owner because your salary doesn't count toward it. This is an estimate, not tax advice: it treats your business as a service business, so the QBI deduction phases out between $201,775 and $276,775 of taxable income for a single filer, and it doesn't model state-specific S-corp taxes or S-corp health-insurance rules. Talk to a CPA before electing S-corp status.
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Based on the total tax owed above, split into four IRS due dates. Add last year's numbers to check the IRS "safe harbor" — the minimum you can pay each quarter without an underpayment penalty, even if you end up owing more when you file.
Paying at least 90% of this year's estimated tax each quarter avoids the underpayment penalty.
Enter a W-2 salary you're comparing against. This shows the 1099 gross income you'd need — at the expenses, state, and QBI setting above — to take home the same amount after covering the employer's half of FICA yourself.
Enter the annual take-home you want. This shows the 1099 gross income — and hourly, day, or monthly rate — you'd need to charge, using the expenses, state, and QBI setting above.
On 1099 income you pay self-employment tax (15.3% on 92.35% of net income) plus federal and state income tax, after the 20% qualified business income (QBI) deduction that most freelancers can take. For a single filer earning $60,000 net as a freelancer in a no-tax state, total taxes are roughly $12,000, meaning take-home of about $48,000. California or New York add roughly $1,600–$2,600 on top of that.
The self-employment tax rate is 15.3% — 12.4% for Social Security (on the first $184,500 of net SE income in 2026) and 2.9% for Medicare (on all net SE income). This 15.3% is applied to 92.35% of your net income, not the full amount. The IRS lets you deduct half of this tax from your gross income when calculating federal income tax.
Common deductions for 1099 workers: home office (dedicated workspace), computer and equipment, software subscriptions, internet and phone (business portion), professional development, travel and mileage, health insurance premiums, and retirement contributions (SEP-IRA up to 25% of net SE income, Solo 401k up to $70,000 in 2026). Each dollar of deductions reduces both your SE tax and your income tax.
Generally yes. W-2 employees have their employer cover half of FICA taxes (7.65%). As a 1099 contractor you pay the full 15.3% SE tax yourself. On $60,000 of income that's roughly $4,590 extra in FICA taxes compared to a W-2 employee at the same income. Smart 1099 workers factor this into their rate negotiation — a $75/hr contract rate effectively competes with a ~$68/hr W-2 rate after accounting for the extra SE tax burden.
Divide your estimated annual tax bill (SE tax + federal income tax + state income tax) by 4. Each quarter's payment is due: April 15 (Q1), June 15 (Q2), September 15 (Q3), and January 15, 2027 (Q4). If you underpay by more than $1,000, the IRS may charge an underpayment penalty. A safe rule of thumb: set aside 25–30% of every invoice payment.
You can deduct 50% of your self-employment tax from your gross income before calculating federal income tax. This is an above-the-line deduction — you get it even without itemizing. It partially offsets the burden of being both employee and employer. On $70,000 of net SE income, the SE tax is roughly $9,916 and the deduction reduces your taxable income by $4,958.
Yes, in most states. Nine states have no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming) so only federal and SE taxes apply. All other states tax freelance income at their standard income tax rates — the same rates that apply to W-2 income. California, New York, Oregon, and Minnesota have the highest rates.
A common rule of thumb for most 1099 workers: set aside 25–30% of each payment for taxes. If you're in a high-tax state or a high bracket, consider 30–35%. Keep this in a separate savings account and use it for quarterly estimated payments. Using our calculator with your actual income and expenses gives you a more precise number.
It depends on your profit. With a $2,000 yearly running cost, a 60% salary, and the QBI deduction included, this calculator's model shows an S corp starting to come out ahead at around $44,000 of net profit for a single filer in a state with no income tax, saving about $900 a year at $100,000 and more as profit grows. Below that, payroll setup, an extra tax return, and state fees eat the savings. The comparison above uses your own numbers, so run it with your actual profit and state before deciding, and check with a CPA.
The IRS doesn't set a percentage. It requires S corporations to pay shareholder-employees reasonable compensation for the services they provide before taking non-wage distributions, and it can reclassify distributions as wages if the salary is too low. A reasonable figure is roughly what you'd have to pay someone else to do your work, based on your role, hours, and industry pay data. The 60% default in the calculator above is a placeholder assumption, not IRS guidance.
Self-employment tax is 15.3% of 92.35% of your net profit, which works out to about 14.13% of net profit. That is about $1,413 on $10,000, $2,826 on $20,000, $7,065 on $50,000, and $14,130 on $100,000. The 12.4% Social Security part stops at $184,500 in 2026; the 2.9% Medicare part applies to everything. This is separate from federal and state income tax.
No. Self-employment tax is a flat 15.3% that pays for Social Security and Medicare, applied to 92.35% of your net profit. Income tax is separate and progressive, from 10% to 37% in 2026, and is figured on your taxable income after deductions. You owe both. You can deduct half of your self-employment tax when figuring income tax, but that deduction does not reduce the self-employment tax itself.
Generally yes, if you expect to owe at least $1,000 in federal tax for the year after subtracting any withholding and credits, because no one withholds tax from 1099 payments. You can avoid an underpayment penalty by paying at least 90% of this year's tax or 100% of last year's tax (110% if last year's adjusted gross income was over $150,000). Payments are due April 15, June 15, September 15, and January 15.
1099 income is taxed with the same federal brackets as wages. For a single filer in 2026: 10% on taxable income up to $12,400, 12% up to $50,400, 22% up to $105,700, 24% up to $201,775, 32% up to $256,225, 35% up to $640,600, and 37% above that. Because you also pay 15.3% self-employment tax on 92.35% of net profit, your combined marginal rate is about 7 percentage points higher than a W-2 worker's in the same bracket below the Social Security wage base.
Two different deadlines get mixed up. Businesses that paid you must send you a 1099-NEC by January 31 (the next business day if that falls on a weekend). Your own taxes are due in quarterly installments on April 15, June 15, September 15, and January 15, and your annual return is due April 15.
For a single filer with no deductions, this calculator estimates about 20% of income at $60,000 and 22% at $100,000 in a state with no income tax like Texas or Florida; about 23% and 27% in California; and about 25% and 27% in New York. Those figures include self-employment tax, federal income tax after the 20% qualified business income deduction, and state income tax. Business expenses and deductions will lower them, and if your business doesn't qualify for the QBI deduction, add roughly 3 percentage points.
It depends on the pay difference. A 1099 worker pays both halves of Social Security and Medicare tax and usually gets no employer benefits or unemployment coverage. On $60,000 of income, the employer's half that you now pay yourself is about $4,590 a year, so a 1099 offer generally has to pay more than a W-2 offer to leave you equally well off. On the other side, 1099 workers can deduct business expenses and open retirement plans with higher limits. The comparison above shows the gap at your income.
Yes. Income from platforms like YouTube, Twitch, Etsy, or Patreon — usually reported on a 1099-K or 1099-NEC — is self-employment income like any other freelance work, once you subtract your platform and business expenses. It's subject to the same 15.3% self-employment tax and the same 20% QBI deduction calculated above. The $600 threshold that triggers a 1099-K from a platform is a reporting rule, not a tax-owing threshold — you owe tax on net platform income even if no form was issued.
More than the W-2 salary itself, because as a 1099 contractor you cover the full 15.3% self-employment tax yourself instead of splitting it with an employer, and you typically get no employer-paid benefits. Use the "What 1099 Rate Matches a W-2 Salary?" tool above with your actual expenses and state to see the exact gap — it's usually in the range of the extra FICA cost shown in the comparison further up this page, plus more if you're replacing lost benefits.
You avoid an underpayment penalty if you pay, over the year, at least 90% of what you owe for the current year, or 100% of what you owed last year (110% if last year's adjusted gross income was over $150,000) — whichever of those is lower. Use the "Quarterly Payment Schedule" tool above with last year's numbers to see the exact amount, since it can be lower than simply dividing this year's estimated tax by four.