How 1099 Freelance Taxes Work in the US
When you are a W-2 employee, your employer automatically deducts taxes from your paycheck and pays half of your Medicare and Social Security taxes for you. When you are a 1099 independent contractor, you are responsible for paying the entire amount yourself.
1. Self-Employment Tax (15.3%)
Before you even calculate your normal income tax, you must pay Self-Employment (SE) tax. This covers your Medicare and Social Security contributions. It is calculated as 15.3% of your net business profit (which is your gross income minus your deductible business expenses).
2. Standard Income Tax
After calculating your SE tax, your net profit is then subject to standard federal and state income taxes, just like regular employee wages. Your exact bracket depends on your total household income, but setting aside an additional 10% to 15% is a safe buffer for most part-time freelancers.