How the 1099 Tax Calculator Works

Our calculator uses the exact same formulas the IRS uses — applied to your specific income, state, filing status, and deductions. Here is a full breakdown of every calculation.

The Three Taxes Every Freelancer Pays

As a self-employed individual, you owe three separate taxes on your income:

• Self-Employment Tax (15.3%) — Covers Social Security (12.4%) and Medicare (2.9%). This replaces the FICA taxes that employers withhold from W-2 employees.
• Federal Income Tax (10%–37%) — Progressive tax based on your total taxable income after deductions.
• State Income Tax (0%–13.3%) — Varies by state. Nine states have no income tax at all.

Step-by-Step Calculation Methodology

Step 1: Net Self-Employment Income

Business expenses reduce your taxable income dollar-for-dollar. A freelancer earning $80,000 with $10,000 in legitimate business expenses has a net SE income of $70,000.

Step 2: Self-Employment Tax

The IRS multiplies by 0.9235 (92.35%) because self-employed individuals are allowed to deduct the employer-equivalent half of SE tax before calculating. This mirrors how W-2 employees only pay 7.65% — the employer pays the other 7.65%.

Step 3: SE Tax Deduction

You can deduct 50% of your SE tax from your gross income as an above-the-line deduction, reducing your AGI and therefore your income tax.

Step 4: Adjusted Gross Income (AGI)

Step 5: Federal Taxable Income

Step 6: QBI Deduction

Available for most freelancers with taxable income below $197,300 (single) or $394,600 (MFJ) in 2026.

Step 7: Federal Income Tax

Applied using the 2026 progressive brackets:

Taxable Income (Single)	Taxable Income (MFJ)	Tax Rate
$0 – $11,925	$0 – $23,850	10%
$11,926 – $48,475	$23,851 – $96,950	12%
$48,476 – $103,350	$96,951 – $206,700	22%
$103,351 – $197,300	$206,701 – $394,600	24%
$197,301 – $250,525	$394,601 – $501,050	32%
$250,526 – $626,350	$501,051 – $751,600	35%
Over $626,350	Over $751,600	37%

Step 8: State Income Tax

Applied using each state's 2026 rates and brackets. Nine states (AK, FL, NV, NH, SD, TN, TX, WA, WY) have no income tax. See our State Tax Guide for all 50 states.

Step 9: Quarterly Payment

2026 Standard Deductions

Filing Status	Standard Deduction
Single	$16,100
Married Filing Jointly	$32,200
Married Filing Separately	$16,100
Head of Household	$21,900

Important Limitations

• This calculator provides estimates only and is not a substitute for professional tax advice.
• State tax calculations use simplified models. Some states have additional local taxes, surcharges, or credits not captured here.
• The QBI deduction has complex phase-out rules for certain service businesses above the income thresholds. Consult a CPA if you are near those thresholds.
• Alternative Minimum Tax (AMT) is not calculated.
• Net Investment Income Tax (3.8% on investment income above certain thresholds) is not included.

Sources

• IRS Publication 505 — Tax Withholding and Estimated Tax
• IRS Schedule SE — Self-Employment Tax
• IRS Revenue Procedure 2025-28 — 2026 inflation adjustments
• Tax Foundation — 2026 State Individual Income Tax Rates and Brackets
• One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025