Worked example
A single contractor paid $75,000 with $8,000 of expenses has $67,000 of profit. Federal tax comes to $13,651: $9,467 self-employment tax and $4,184 income tax. They keep $53,349, so setting aside 21% of each payment covers the federal bill.
Why 1099 income feels taxed twice
A 1099 contractor pays two federal taxes on profit. Self-employment tax takes 15.3% of most of it for Social Security and Medicare. Income tax then applies at your bracket rate after deductions. An employee on the same pay sees only about half the Social Security and Medicare bill, because the employer pays the rest.
The good news is that you are taxed on profit, not revenue. Every legitimate business expense reduces both taxes.
How much to set aside
A common rule of thumb is 25 to 30% of each payment for federal tax, plus your state rate. The calculator gives you a figure for your own income. At lower incomes the standard deduction and the 20% qualified business income deduction bring the share down; at higher incomes the bracket rate pushes it up.
Move the money into a separate savings account the day you are paid, then send it to the IRS each quarter. Treating tax money as untouchable is the habit that keeps April from hurting.
Getting a 1099 form
Starting with payments made in 2026, clients only need to send you a Form 1099-NEC if they paid you $2,000 or more in the year (it used to be $600). Payment apps and marketplaces send Form 1099-K above $20,000 and 200 transactions. All of your self-employment income is taxable whether or not a form arrives, so track it yourself.
What the estimate includes
- Self-employment tax on 92.35% of profit, with the 2026 Social Security wage base.
- The deduction for half of self-employment tax.
- The 2026 standard deduction ($16,100 single, $32,200 married filing jointly).
- The qualified business income deduction, worked out conservatively above the income threshold.
- 2026 federal income tax brackets.
It does not include state or local tax, tax credits such as the child tax credit, or other income such as investments.
Common questions
How much tax do I pay on $50,000 of 1099 income?
For a single filer with $50,000 of profit and no other income, federal tax is about $9,732: $7,065 of self-employment tax and the rest income tax.
Is 1099 income taxed more than W-2 income?
Yes, by roughly 7.65% of profit, because you pay both halves of Social Security and Medicare. Business deductions and the QBI deduction can close some of that gap.
Do I pay tax if I didn't receive a 1099?
Yes. The form is only a report. You must include all self-employment income on Schedule C.
Can I deduct expenses from 1099 income?
Yes. Ordinary and necessary business expenses, such as software, equipment, a home office, business mileage and professional fees, are subtracted on Schedule C before either tax is worked out.
Official sources: IRS: Self-employed individuals tax center, IRS: 2026 inflation adjustments. This calculator gives estimates for planning, not tax advice. Read the disclaimer.