💼 Self-Employment Tax: The Complete 1099 Guide
If you're a freelancer, contractor, gig worker, or 1099 earner, you pay both halves of Social Security and Medicare taxes. That's 15.3% right off the top — and most new self-employed workers are shocked by their first tax bill.
Self-employment tax is 15.3% of net self-employment income (12.4% Social Security + 2.9% Medicare). You pay both the employee and employer halves. Half is deductible on your 1040. Calculate yours with the Self-Employment Tax Calculator.
📊 SE Tax vs W-2 Tax
| Tax | W-2 Employee | 1099 Self-Employed |
|---|---|---|
| Social Security | 6.2% (you) | 12.4% |
| Medicare | 1.45% (you) | 2.9% |
| Total FICA | 7.65% | 15.3% |
W-2 employees: your employer pays the other 7.65% behind the scenes. As a 1099 worker, you ARE the employer — so you pay both halves. The good news: you can deduct half of your SE tax from your income tax.
💰 How SE Tax Is Calculated
Step 1: Take your net profit (gross income − business expenses)
Step 2: Multiply by 92.35% (IRS adjustment)
Step 3: Multiply by 15.3% for SE tax
Step 4: Deduct half of SE tax from taxable income
Example: $80,000 net profit → $73,880 × 15.3% = $11,304 SE tax
For 2026, Social Security tax only applies to the first $168,600 of income. Above that, you only pay the 2.9% Medicare portion (plus 0.9% Additional Medicare for high earners).
📝 Deductions Every 1099 Worker Should Know
- Home office — Simplified ($5/sq ft up to 300 sq ft) or actual expenses
- Business mileage — $0.67/mile for 2026 (business driving)
- Health insurance premiums — 100% deductible, self-employed only
- Retirement contributions — SEP-IRA up to 25% of net income
- Self-employment tax deduction — Half of SE tax, straight off income
- Qualified Business Income (QBI) — 20% deduction on qualified income
- Software & subscriptions — QuickBooks, Adobe, SaaS tools
- Professional development — Courses, books, conferences
- Phone & internet — Business-use percentage
- Equipment — Section 179 or bonus depreciation
📅 Quarterly Estimated Taxes
Unlike W-2 workers, 1099 workers must pay taxes quarterly. Miss a payment and you'll owe penalties + interest.
Calculate your quarterly payments with the Self-Employment Tax Calculator.
❓ FAQ
Do I pay SE tax on gross or net income?
Net income (after business expenses). Legitimate business expenses reduce both SE tax and income tax, so track every receipt.
What if I have both W-2 and 1099 income?
You'll pay SE tax on the 1099 portion only. Your W-2 employer already withheld FICA on your salary. If your W-2 income already exceeds the SS wage cap, you may not owe Social Security on the 1099 portion.
Can I avoid SE tax completely?
Legally, no — if you have net self-employment income above $400, you must pay SE tax. An S-Corp election can reduce SE tax on distributions, but requires payroll and higher accounting costs.
Should I form an LLC?
An LLC doesn't change SE tax for a single-member owner (it's still taxed as a sole proprietor). But it provides liability protection. Consult a CPA before electing S-Corp status.
Calculate Your SE Tax
Free calculator shows SE tax, deductible half, and quarterly payments.
🧮 Try the Self-Employment Tax Calculator →