How tax on 1099 income works
Nobody withholds anything from a 1099 payment, so the whole bill is yours to cover. It has three parts:
- Self-employment tax. 15.3% on 92.35% of your profit: 12.4% for Social Security, up to the 2026 wage base of $184,500 (shared with any W-2 wages), and 2.9% for Medicare, with no cap. Above $200,000 ($250,000 joint) an extra 0.9% Medicare tax applies. This is the part an employer would split with you; as a contractor you pay both halves.
- Federal income tax. On your profit after half the self-employment tax, the 2026 standard deduction ($16,100 single, $32,200 joint, $24,150 head of household) and the 20% qualified business income deduction, at the 2026 brackets, stacked on top of any wages.
- State income tax, as a flat rate on the business income. Close enough to plan with in most states; nine states have no income tax at all.
On the example above, $95,000 paid with $10,000 of expenses, a single filer owes about $21,121 in total: 22% of what was paid, leaving $63,879. Self-employment tax is the bigger federal piece, which surprises most people the first year.
Turning the bill into a habit
The percentage in the result is of what you’re paid, before expenses, because that’s the number you see when a payment lands. Move that share to a separate account the day it arrives and the quarterly payments are transfers, not emergencies. If a year goes much better or worse than planned, run it again and change the percentage.
What it leaves out
Itemized deductions, tax credits (the child tax credit is the common one), capital gains, and income other than self-employment and wages. Above $201,750 of taxable income ($403,500 joint) it assumes the smallest qualified business income deduction the rules allow, so it errs toward setting aside slightly too much rather than too little.
Questions, answered
How much tax do I pay on 1099 income?
Two taxes, plus your state. Self-employment tax is 15.3% on 92.35% of your profit (Social Security and Medicare, both halves). Income tax is charged on your profit after half the self-employment tax, the standard deduction and the 20% qualified business income deduction, at your 2026 bracket. On $85,000 of profit for a single filer that is about $17,800 federal, or roughly 21% of the profit.
Do I pay tax on my gross 1099 income or my profit?
On your profit: what clients paid you, minus your business expenses. The 1099-NEC or 1099-K shows the gross; your Schedule C subtracts the expenses. That is why tracking expenses lowers the bill twice, once for income tax and once for self-employment tax.
How much of each 1099 payment should I set aside?
The calculator shows it as a percentage of what you’re paid, before expenses, so you can apply it to each payment as it lands. For many people with moderate income it comes out between 20% and 30%, but it depends on your bracket, state and expenses.
Do I have to pay 1099 taxes quarterly?
If you expect to owe $1,000 or more for the year, the IRS expects estimated payments on April 15, June 15, September 15 and January 15. The quarterly figure here is the year’s federal tax divided by four. For the exact amount still due by each date, including the safe harbor, use the quarterly estimated tax calculator.
Does a W-2 job change the tax on my 1099 income?
Yes. The 1099 profit is taxed on top of your wages, so it reaches higher brackets, and your wages use up part of the Social Security wage base ($184,500 in 2026). Enter your wages and the calculator stacks the business income on top of them.
Sources
- Rev. Proc. 2025-32 (PDF) — IRS. The 2026 brackets, standard deduction and qualified business income thresholds.
- Contribution and benefit base — Social Security Administration. The $184,500 wage base for 2026.
- Self-employment tax (Social Security and Medicare taxes) — IRS. The 15.3% rate and the 92.35% rule.
- Form 1040-ES, Estimated Tax for Individuals — IRS. Who pays quarterly, and the 2026 due dates.
- Schedule C (Form 1040), Profit or Loss From Business — IRS. Where 1099 income and business expenses go.
