Will I be paying 15% or 30% tax rate on my 1099-NEC income?

You're going to be paying both income tax AND self-employment tax on your 1099-NEC income. The self-employment tax is roughly 15.3% (12.4% for Social Security and 2.9% for Medicare) - this is basically covering both the employee and employer portions of FICA taxes. Then on top of that, you'll pay regular income tax based on your tax bracket after deductions. At $63,000, you're likely in the 22% marginal bracket for 2025, but remember that's just on the portion of income that falls into that bracket. Your effective rate will be lower. The good news is you can deduct the employer half of the self-employment tax (about 7.65%) from your income. And don't forget you can likely take the Qualified Business Income deduction which could reduce your taxable income by up to 20%.

I was in your EXACT situation last year. Super stressed about my 1099-NEC taxes. I ended up using https://taxr.ai and it was a game changer. It analyzed all my documents and showed me exactly what I'd owe - plus all the deductions I could take that I had no idea about! The thing that helped me the most was understanding what business expenses I could legitimately write off. Turns out I was missing a ton of deductions like my home office, portion of internet/phone, mileage, etc. The tool breaks down each tax calculation so you can see exactly where that "30%" number comes from (and how to get it lower).

OK I have to admit I was wrong about taxr.ai. I tried it after my skeptical comment and it showed me that I've been calculating my self-employment tax all wrong. I've been overpaying by almost $2,800 a year! It found several deductions that I qualified for but had no idea about. The part that was most helpful was seeing the breakdown between income tax and SE tax. I finally understand why everyone throws around that "30%" figure - it's not one tax rate, it's the combination of multiple taxes. Having it all visualized made a huge difference for me.

If you're stressed about your tax situation with the 1099-NEC, I highly recommend getting on the phone with the IRS directly. I know, I know... everyone says it's impossible to reach them, but I used https://claimyr.com to get through to an actual person in under 15 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c I had so much confusion about self-employment tax rates and estimated payments. The IRS agent I spoke with was surprisingly helpful and walked me through exactly how to calculate both parts correctly. They also explained how to avoid underpayment penalties which was a huge relief.

I need to eat some serious crow here. After bashing Claimyr in my comment, I decided to try it out of desperation after getting three different answers from tax "experts" about how to handle my 1099-NEC income. Got through to an IRS representative in about 12 minutes (which is INSANE compared to my previous attempts). The agent spent nearly 30 minutes with me going through my specific situation and clarified the exact tax rates that apply to me. Turns out I was massively overcomplicated my situation and actually owed less than I thought. The peace of mind from getting an official answer directly from the IRS was absolutely worth it. No more guessing or stressing about whether I'm calculating things correctly.

Here's a simple way to think about your 1099-NEC taxes: First, calculate your Self-Employment tax: $63,000 × 92.35% × 15.3% = about $8,891 (The 92.35% is because you get to deduct the "employer half" of SE tax) Then, calculate your income tax: - Start with $63,000 - Subtract half of SE tax: -$4,445 - Subtract standard deduction: -$12,950 (2025 estimate for single filer) - Consider QBI deduction: -$9,221 (simplified calculation) - Taxable income: about $36,384 At that income, you'd have some money taxed at 10% and some at 12%, for an effective income tax rate much lower than your marginal rate. Total tax rate ends up being around 22-25% in most cases, not 30%.

Don't forget about state taxes too!! Everyone's always talking about federal rates but depending on where you live you might owe another 5-9% to your state. My first year on 1099-NEC I completely forgot about state taxes and got hit with a surprise $3k bill.

As someone who went through this exact panic last year, I totally understand the stress! The confusion usually comes from people mixing up different scenarios. Here's what actually happens with your $63k 1099-NEC income: You'll pay approximately: - Self-employment tax: ~15.3% on about 92.35% of your income = roughly $8,900 - Federal income tax: After deductions (standard deduction, half of SE tax, possibly QBI deduction), you're looking at maybe 10-15% effective rate on what's left = roughly $4,000-6,000 - Don't forget state taxes if your state has them! So your total effective federal tax rate will likely be around 20-25%, not 30%. The people saying 30% are probably including state taxes or being overly conservative. My advice: Start making quarterly estimated payments ASAP for next year. I use the "safe harbor" rule - pay 100% of last year's total tax liability divided by 4, and you won't get penalties even if you end up owing more. It's better to slightly overpay than deal with underpayment penalties. Also, track EVERY business expense from now on. Home office, internet, phone, mileage, supplies - it all adds up and reduces your taxable income significantly.

This is such a helpful thread! I'm in a similar boat - first year with significant 1099-NEC income and totally overwhelmed by the tax implications. One thing I learned the hard way is to open a separate savings account just for taxes. I set up an automatic transfer of 25% of every payment I receive to go straight into that account. It's helped me avoid the panic of "oh no, where am I going to find $15k for taxes??" Also, if you're really behind on setting money aside, consider opening a Solo 401k or SEP-IRA before year end. You can contribute a significant amount and reduce your current year tax burden. For 2025, you might be able to contribute up to $23,000 to a Solo 401k (plus potential employer contributions as the business owner), which would lower your taxable income substantially. The quarterly payment thing is real though - don't wait until next April to deal with this. Even if you can't pay the full amount you'll owe, getting something in quarterly will help minimize penalties.