How tax on 1099 income is worked out
Profit = 1099 income − business expenses
SE tax = 15.3% × 92.35% × profit (Social Security part capped at $184,500 including W-2 wages)
Taxable income = W-2 wages + profit − ½ SE tax − standard deduction − QBI deduction
Tax on 1099 work = (SE tax + income tax with it) − income tax on W-2 wages alone
SE tax = 15.3% × 92.35% × profit (Social Security part capped at $184,500 including W-2 wages)
Taxable income = W-2 wages + profit − ½ SE tax − standard deduction − QBI deduction
Tax on 1099 work = (SE tax + income tax with it) − income tax on W-2 wages alone
No one withholds tax from 1099 pay, so you pay both halves of Social Security and Medicare yourself, plus income tax. If you also have a W-2 job, the 1099 income lands on top of your wages, so it's taxed at your highest bracket. This calculator shows the extra tax the 1099 work adds.
The QBI deduction lets most sole proprietors deduct 20% of qualified business income (here, profit minus half of SE tax), limited to 20% of taxable income. From 2026 there's a $400 minimum if you have at least $1,000 of QBI from a business you actively run. We include it only below the 2026 income threshold of $201,750 ($403,500 joint), where no extra limits apply.
Worked example
A single driver earns $60,000 on 1099s with $10,000 of expenses: a $50,000 profit.
- SE tax: 92.35% × $50,000 = $46,175 × 15.3% = $7,064.78
- AGI: $50,000 − $3,532.39 = $46,467.61. Minus $16,100 = $30,367.61
- QBI deduction: 20% × $30,367.61 = $6,073.52 (smaller than 20% × $46,467.61). Taxable income $24,294.09; income tax $2,667.29
- Total: $9,732.07, or about 16¢ of every dollar paid, $2,433.02 a quarter.
Limits
- Federal only. Most states add their own income tax.
- Uses the standard deduction, and no credits. Self-employed health insurance, SEP-IRA or solo 401(k) contributions, and the home office deduction would lower the tax; subtract the business ones as expenses.
- Above the QBI threshold the 20% deduction is left out, because wage, property and service-business limits apply (Form 8995-A).
- Withholding on your W-2 job is assumed to cover the tax on those wages.
Sources
- IRS Rev. Proc. 2025-32 – 2026 brackets, standard deduction, §199A thresholds
- 2026 Form 1040-ES – 2026 SE tax worksheet and the $400 QBI minimum
- SSA contribution and benefit base – $184,500
- 26 U.S.C. 199A (qualified business income deduction) – 20% of QBI, limited to 20% of taxable income; $400 minimum
- Form 8995 (QBI deduction, simplified)
- IRS Topic 554, Self-employment tax