A salary and a side business go on the same tax return, and that changes the sum. Side income is not taxed like a small freelance business standing alone. It is stacked on top of your wages, so its first dollar lands in the highest bracket the wages reached, and self-employment tax is added to that. This guide shows what side income costs in tax at different salaries and the two ways to pay it.
Short answer (single filer, 2026): with a salary between about $66,500 and $121,800, every $1,000 of 1099 net profit adds $346 of federal tax: $141 of self-employment tax and the rest income tax. With a salary below that range it adds $253. State income tax is extra. You can pay it in four estimated payments or by raising the withholding on your W-4.
Wages go on line 1 of Form 1040. The side business goes on Schedule C, where income minus expenses gives net profit. That profit feeds two things: Schedule SE, which charges self-employment tax, and your total income, which sets income tax.
Your employer has already withheld income tax, Social Security and Medicare on the wages. Nobody has withheld anything on the side income, and that is the gap this page is about.
Extra federal tax caused by 1099 net profit on top of a salary. Single filer, standard deduction, no state income tax, 2026.
| W-2 salary | $5,000 side profit | $10,000 side profit | $20,000 side profit | $30,000 side profit | Rate on the first $10,000 |
|---|---|---|---|---|---|
| $40,000 | $1,264 | $2,528 | $5,056 | $7,723 | 25.3% |
| $60,000 | $1,264 | $2,808 | $6,265 | $9,723 | 28.1% |
| $80,000 | $1,729 | $3,458 | $6,915 | $10,373 | 34.6% |
| $100,000 | $1,729 | $3,458 | $6,915 | $10,494 | 34.6% |
| $150,000 | $1,822 | $3,643 | $7,287 | $10,930 | 36.4% |
Compare that with a full-time freelancer whose whole income is $10,000: they would pay about 14% of it, because the standard deduction wipes out the income tax. With a salary underneath, the same $10,000 costs between a quarter and a little over a third.
Income tax brackets fill from the bottom. Your wages use the standard deduction and the lower brackets first. The side profit arrives after that and starts wherever the wages stopped.
Each $1,000 of side profit then costs $141 of self-employment tax plus your bracket rate on $929. The $929 is the $1,000 less the half of the self-employment tax that is deductible. In the 22% bracket that is $141 plus $204.
Having Social Security and Medicare withheld from your wages does not cover the side income. Self-employment tax is charged on 92.35% of net profit at 15.3%, once profit for the year reaches $400.
The exception is at high incomes. The 12.4% Social Security part stops at $184,500 of earnings for 2026, and wages count toward that limit first. Someone with $170,000 of wages and $30,000 of side profit has $27,705 of self-employment earnings but only $14,500 of room left under the limit. Their Social Security portion is 12.4% of $14,500, which is $1,798, not 12.4% of $27,705. The 2.9% Medicare part has no limit and applies to all of it.
They apply the $184,500 limit to self-employment earnings alone. If your wages and side profit together are above $184,500, they overstate your self-employment tax. Below that they are exact.
One more rate appears at the top: an extra 0.9% Medicare tax on combined wages and self-employment earnings above $200,000 for a single filer, or $250,000 for a joint return.
Give your employer a new Form W-4 with an extra dollar amount per pay period in Step 4(c). Take a $70,000 salary with $20,000 of side profit: the added tax is $6,915, which over 26 paychecks is $266 each. If you start part-way through the year, divide by the paychecks you have left.
Withholding has one advantage. The IRS treats it as paid evenly across the year no matter when it was taken, so starting in September still covers side income earned in March without an underpayment charge. Your employer sees the number on the form and nothing about the reason.
The same example comes to $1,729 on each of the four due dates: April 15, June 15, September 15 and January 15. This suits side income that arrives unevenly, because you can size each payment to what you earned. The quarterly tax calculator works out the amounts.
There is no underpayment charge if you owe less than $1,000 when you file. There is also none if your withholding and estimates together reach 90% of this year's tax, or 100% of last year's (110% if last year's adjusted gross income was above $150,000).
That second rule helps in the first year of a side business. If you had only the salary last year, your normal withholding has probably already matched last year's tax. In that case the side income brings no penalty this year, although the full balance is still due in April, so the money needs to be set aside.
The state taxes the side profit at its own marginal rate. Tax added by $20,000 of side profit on top of a $70,000 salary, single filer, 2026:
| State | Tax the side income adds | Share of the $20,000 |
|---|---|---|
| No state income tax | $6,915 | 34.6% |
| Pennsylvania | $7,529 | 37.6% |
| Illinois | $7,835 | 39.2% |
| Georgia | $7,843 | 39.2% |
| New York | $7,919 | 39.6% |
| California | $8,536 | 42.7% |
City and county income taxes, where they exist, are on top of these. Every state has its own page with a calculator, listed in the state-by-state table.
Your employer sends a W-2. A client may send a 1099-NEC and a payment platform a 1099-K, each only above its reporting threshold, which the guide to 1099-NEC, 1099-MISC and 1099-K covers. The income is taxable whether or not a form arrives. Report the full amount you were paid, less expenses.
The refund estimator takes 1099 income, W-2 wages and the tax already withheld, and shows the balance due or refund for the two combined.
Open the refund estimator →Yes. The main 1099 calculator on this site has a box for other income such as W-2 wages, and the refund estimator also takes the tax already withheld, so it shows the balance due or refund for both incomes on one return.
For a single filer in a state with no income tax in 2026, $2,528 with a $50,000 salary and $3,458 with an $80,000 or $100,000 salary. State income tax is extra.
No. Each dollar is taxed once. Your employer withholds Social Security, Medicare and income tax on the wages. Nothing is withheld on side profit, so you pay self-employment tax and income tax on that part yourself.
Yes. Enter an extra amount per paycheck in Step 4(c) of Form W-4. Withholding counts as paid evenly through the year, so it can replace estimated payments entirely.
Only if your withholding will leave you owing $1,000 or more and you miss both safe harbors. If withholding already covers 100% of last year's tax, or 110% when last year's adjusted gross income was above $150,000, no estimated payments are required.
Sources: IRS Rev. Proc. 2025-32 (2026 brackets and standard deductions); IRS Publication 505 (withholding and estimated tax, including the safe harbors); IRS Form W-4 and Schedule SE instructions; SSA 2026 wage base. Estimates for planning only, not tax advice.