Self-Employment Tax Explained for 2026
When you work for yourself as a 1099 contractor, freelancer or gig worker, you pay both the employee and employer share of Social Security and Medicare — together the 15.3% self-employment tax. It applies to 92.35% of your net profit, with the 12.4% Social Security portion capped at the annual wage base and the 2.9% Medicare portion uncapped. High earners also pay an extra 0.9% Medicare surtax.
On top of SE tax you owe ordinary federal and state income tax on your profit, though you can deduct half of your SE tax first. Because no employer withholds for you, the IRS expects quarterly estimated payments — this calculator divides your total estimated tax into four to help you set money aside. A qualified accountant can help you claim deductions (home office, equipment, retirement plans like a SEP-IRA) that legitimately lower the bill.
Sources: IRS Schedule SE, IRS.gov self-employed guidance. Last updated July 29, 2026. Estimates only — not tax advice.
Frequently Asked Questions
What is the self-employment tax rate for 2026?
Self-employment tax is 15.3% — 12.4% for Social Security (up to the wage base) and 2.9% for Medicare — charged on 92.35% of your net self-employment profit.
Do I pay income tax on top of self-employment tax?
Yes. SE tax funds Social Security and Medicare; you also owe federal (and usually state) income tax on your profit. You can deduct half of your SE tax before calculating income tax.
How much should I set aside for 1099 taxes?
A common rule of thumb is 25–30% of net profit, but it depends on your income and state. The calculator's effective rate gives you a personalised figure.
What are quarterly estimated taxes?
Self-employed people generally pay tax in four estimated installments during the year. The tool divides your total estimated tax by four to show a quarterly amount.