Self-employment tax and 1099 income

Employees usually have federal income tax and the employee share of FICA withheld each payday. Independent contractors generally receive 1099 income with little withholding and must plan for estimated taxes plus self-employment tax — Social Security and Medicare on net earnings from self-employment.

The 1099 calculator starts with gross receipts minus business expenses to get net profit. Schedule SE multiplies net profit by 92.35% to get net earnings. If that amount is below $400, we do not assess SE tax.

On net earnings we apply Social Security at 12.4% up to the $184,500 wage base (reduced by any other W-2 wages you enter) and Medicare at 2.9%, plus Additional Medicare Tax using filing-status thresholds on combined W-2 wages + SE earnings.

For income-tax purposes, self-employed people can deduct one-half of SE tax above-the-line. Our federal and state income-tax estimates reduce the taxable base by that amount (state conformity can vary; we use a simplified treatment).

Many pass-through businesses qualify for a Qualified Business Income deduction of up to 20% of QBI. Our calculator includes a simplified toggle (on by default) that does not model SSTB limitations or income phaseouts. Turn it off for a more conservative federal tax figure.

Choosing quarterly divides the annual estimate by four for planning set-asides. That is not a Form 1040-ES safe-harbor worksheet. For tax year 2026 estimates, always cross-check with IRS estimated-tax rules when payment timing matters.