What is self-employment tax?

It is the 15.3% Social Security and Medicare tax that self-employed people pay on their net earnings - both the employee and employer halves, since you are both. It applies on top of regular income tax.

Why do I owe more tax on 1099 income than W-2 income?

Because as a W-2 employee your employer pays half of your FICA. As a 1099 contractor you pay both halves yourself - the 15.3% self-employment tax - which is why setting aside roughly 25-30% of net 1099 income is a common rule of thumb.

Can I deduct anything against self-employment tax?

Yes. SE tax is calculated on 92.35% of your net earnings, and you can deduct half of the SE tax against your income tax. Business expenses also reduce your net earnings before the tax is figured.

1099 tax calculator

Why 1099 income is taxed more

As a W-2 employee, your employer quietly pays half of your Social Security and Medicare taxes. As a 1099 contractor, you are both the employer and the employee, so you pay both halves - the 15.3% self-employment (SE) tax - on top of regular income tax. That is why a freelancer owes noticeably more on the same headline income than an employee does. This calculator estimates both layers.

How the math works

SE tax base = 92.35% of your net self-employment earnings (revenue minus business expenses).
SE tax = 12.4% Social Security (up to the wage base) + 2.9% Medicare on that base.
Income tax = applied to your net earnings after deducting half the SE tax and the standard deduction.

Worked example

A single filer with $100,000 of net 1099 income and no W-2 job:

SE tax base: $100,000 × 0.9235 = $92,350
Self-employment tax: about $14,130 (15.3%)
Half-SE deduction: about $7,065
Federal income tax on the remainder: about $11,616
Total federal tax: roughly $25,745 - about 25.7% of net income

That total is why setting aside 25-30% of every 1099 payment is the standard advice.

If you also have a W-2 job

Wages from a job count toward the Social Security wage base ($184,500 in 2026). If your W-2 wages already exceed it, the 12.4% Social Security portion of SE tax drops off, and only the 2.9% Medicare portion applies to your self-employment earnings - lowering your SE tax meaningfully.

Don’t forget quarterly payments

Because nothing is withheld from 1099 income, you generally owe quarterly estimated taxes on it - the calculator shows roughly what to set aside each quarter. Missing them risks an underpayment penalty.

Common mistakes

Forgetting SE tax entirely and being shocked by the bill.
Not tracking business expenses, which reduce the net earnings the tax is based on.
Skipping quarterly payments and incurring penalties.

For the quarterly-payment side, see the estimated tax calculator; to understand your blended rate, see the effective tax rate calculator.

Last reviewed January 2026. This calculator provides general educational estimates based on the inputs you enter and simplified assumptions. It is not financial, tax, legal or investment advice, and figures may differ from your actual liability. Verify with a licensed CPA or financial advisor before acting.