Frequently Asked Questions

Self-employment tax is a tax consisting of Social Security and Medicare taxes for individuals who work for themselves. It's similar to the FICA taxes withheld from W-2 employees' paychecks. The self-employment tax rate is 15.3% (12.4% for Social Security and 2.9% for Medicare) on 92.35% of your net business income.

Our calculator uses official 2025 IRS tax rates and formulas to provide accurate estimates. However, every tax situation is unique. Factors like tax credits, additional deductions, state taxes, and special circumstances can affect your actual tax liability. We recommend consulting with a tax professional for personalized advice.

The Qualified Business Income (QBI) deduction allows eligible self-employed individuals to deduct up to 20% of their qualified business income from their taxable income. This deduction was introduced by the Tax Cuts and Jobs Act.

The deduction begins to phase out for single filers with income above $191,950 and married filing jointly above $383,900 (2025 limits). Specified Service Trade or Businesses (SSTB) like health, law, accounting, and consulting face additional limitations above these thresholds.

If you expect to owe $1,000 or more in taxes for the year, you're required to make quarterly estimated tax payments. The due dates for 2025 are:

• Q1 (Jan-Mar): April 15, 2025
• Q2 (Apr-May): June 15, 2025
• Q3 (Jun-Aug): September 15, 2025
• Q4 (Sep-Dec): January 15, 2026

You can deduct ordinary and necessary business expenses, including:

• Home office expenses (simplified or actual method)
• Business vehicle expenses and mileage ($0.70/mile for 2025)
• Equipment and software
• Professional services (legal, accounting)
• Marketing and advertising
• Health insurance premiums (self-employed)
• Retirement contributions (SEP-IRA, Solo 401k)
• Business insurance

Use our Expense Calculator to see how much each expense category saves you in taxes.

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Generally, you'll need to earn about 30-40% more as a 1099 contractor to match a W-2 salary after accounting for:

• Additional self-employment tax (employer portion of FICA)
• Lost employer benefits (health insurance, 401k match, PTO)
• Additional business expenses

Use our W-2 vs 1099 Calculator to get a precise comparison for your situation.

It depends on your state. Nine states have no income tax:

• Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming

All other states have varying income tax rates. Currently, our calculator shows federal taxes only, but state tax calculations are coming soon.