1099 Taxes for Freelancers in 2026: Self-Employment Tax, Quarterly Payments and Deductions

Self-employment tax: the 15.3% surprise

Employees split Social Security and Medicare with their employer. When you work for yourself you pay both halves: 15.3% on 92.35% of your net profit - 12.4% for Social Security (up to the 2026 wage base of $184,500) and 2.9% for Medicare. On $60,000 of profit, that is about $8,478. Half of it is deductible when you work out income tax.

How much should you set aside?

Most US freelancers set aside 25-35% of profit for federal, state and self-employment tax combined. Open a separate savings account and move that share in every time a client pays you.

Quarterly estimated taxes

The IRS expects tax to be paid as you earn. For the 2026 tax year, estimated payments are due:

• Q1: April 15, 2026
• Q2: June 15, 2026
• Q3: September 15, 2026
• Q4: January 15, 2027

You generally avoid the underpayment penalty if you pay at least 90% of this year's tax, or 100% of last year's tax (110% if your income was above $150,000), spread evenly across the four dates. Paying the “safe harbor” amount based on last year is the simplest way to stay safe in a growing business.

Deductions worth tracking

• Mileage - 72.5 cents per business mile for January-June 2026 and 76 cents from July 1, 2026.
• Home office - a space used regularly and only for work.
• Software, equipment and phone - the business share.
• Health insurance premiums for self-employed people.
• Retirement - SEP IRA or Solo 401(k) contributions.
• Qualified business income (QBI) deduction - many sole proprietors can deduct up to 20% of qualified business income.

Price your work for taxes

A common mistake is to set a rate based on a past salary. Add taxes, health insurance, retirement, software and the unbillable hours you spend on sales and admin, and the real minimum is often far higher. If you want to take home $80,000, you may need to bill over $100 an hour.

Records that make tax time easy

1. Send numbered invoices and keep copies.
2. Use one bank account and card only for the business.
3. Save receipts as PDFs by month.
4. Log mileage the same day you drive.
5. Review profit every quarter before you make each payment.

This guide is general information, not tax advice. Rules change and every situation is different - check with a qualified tax professional.

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