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 rates are approximate. 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 |
| 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.
On 1099 income you pay self-employment tax (15.3% on 92.35% of net income) plus federal and state income tax. For a single filer earning $60,000 net as a freelancer in a no-tax state, total taxes are roughly $16,000–$17,000 — meaning take-home of about $43,000–$44,000. High-tax states like California or New York add $3,000–$6,000 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.