California 1099 taxes: a 2026 guide for the self-employed
Keeper StaffKeeper is a delightfully smart tax filing software that's especially useful for people with 1099 contracting and freelance income. Our blog breaks down IRS guidance with real-world examples and analysis by tax professionals — empowering taxpayers to save money and take control of their finances.
Krislyn ChanKrislyn is Chief Growth Officer at Keeper. At Keeper, she strives to make expert-level tax strategies that used to require a traditional CPA accessible to all. Prior to Keeper, she was at Curology, where she helped bring custom, prescription-grade skincare out of the dermatologist's office to millions of faces.
Key takeaways
- 1099 income in California is subject to three taxes: 15.3% federal self-employment tax, 10% to 37% federal income tax, and 1% to 12.3% California income tax (plus 1% on taxable income over $1 million). California has no separate self-employment tax.
- Set aside 25–30% of your profit in a high-yield savings account, so the money earns interest until your tax payments are due. For a single filer with no other income, total tax runs from 19.7% of profit at $40,000 to 33.2% at $200,000.
- California doesn’t allow the 20% QBI deduction, so your state taxable income is higher than your federal taxable income. Half of your self-employment tax is still deductible.
- California estimated payments aren’t four equal payments. The IRS splits your tax into four equal payments. California asks for 30% in April, 40% in June, nothing in September, and 30% in January, once you expect to owe $500 or more.
How much tax do 1099 workers pay in California?
These tables show estimated 2026 tax on self-employment profit, the amount left after business expenses. They assume this is your only income, you take the standard deduction, and you have no kids or tax credits.
Single filer, 2026
| 1099 profit | Total tax | % of profit | Self-employment tax | Federal income tax | California income tax |
|---|---|---|---|---|---|
| $40,000 | $7,862 | 19.7% | $5,652 | $1,775 | $435 |
| $60,000 | $13,356 | 22.3% | $8,478 | $3,559 | $1,319 |
| $80,000 | $19,260 | 24.1% | $11,304 | $5,344 | $2,613 |
| $100,000 | $26,618 | 26.6% | $14,130 | $8,235 | $4,254 |
| $150,000 | $46,183 | 30.8% | $21,194 | $16,413 | $8,575 |
| $200,000 | $66,329 | 33.2% | $28,234 | $25,196 | $12,898 |
Married filing jointly, one self-employed spouse, 2026
| 1099 profit | Total tax | % of profit | Self-employment tax | Federal income tax | California income tax |
|---|---|---|---|---|---|
| $40,000 | $6,050 | 15.1% | $5,652 | $398 | $0 |
| $60,000 | $10,697 | 17.8% | $8,478 | $1,885 | $334 |
| $80,000 | $15,724 | 19.7% | $11,304 | $3,550 | $871 |
| $100,000 | $21,078 | 21.1% | $14,130 | $5,335 | $1,614 |
| $150,000 | $35,472 | 23.6% | $21,194 | $9,795 | $4,482 |
| $200,000 | $53,215 | 26.6% | $28,234 | $16,472 | $8,509 |
How California taxes 1099 income
If you’re a freelancer, independent contractor, gig worker, or solo business owner in California, your net profit (1099 income minus business expenses) is taxed three ways:
- Federal self-employment tax: 15.3% on 92.35% of your profit. That’s 12.4% for Social Security, on earnings up to $184,500 in 2026, plus 2.9% for Medicare with no cap. It replaces the payroll taxes an employer would split with you. Estimate it with the self-employment tax calculator.
- Federal income tax: 10% to 37% on your taxable income, after the $16,100 standard deduction ($32,200 married filing jointly), half of your self-employment tax, and the 20% qualified business income (QBI) deduction.
- California income tax: 1% to 12.3% on your California taxable income, plus a 1% Behavioral Health Services Tax on taxable income over $1 million. California taxes 1099 income at the same rates as wages, and you report it on Form 540 with Schedule CA (540).
What’s different about California
- No QBI deduction. California doesn’t conform to the federal 20% qualified business income deduction. At $80,000 of profit, that’s $11,650 you deduct federally but not on your California return.
- Some federal deductions carry over. Because California starts with the income on your federal return, three deductions you take there also lower your California tax: half of your self-employment tax, self-employed health insurance premiums, and self-employed 401(k) contributions.
- No State Disability Insurance (SDI) on self-employment income. The SDI withheld from employee paychecks doesn’t apply to 1099 income. You can opt into SDI through the EDD’s Disability Insurance Elective Coverage program, but you don’t have to.
- A smaller standard deduction. California’s 2026 standard deduction is $5,900 for single filers and $11,800 for married couples filing jointly, far below the federal amounts. Each filer also gets a personal exemption credit ($158 single, $316 joint).
California income tax brackets for 2026
These are the 2026 rates the Franchise Tax Board published in October 2026. Head of household filers have their own schedule. Add 1% on taxable income over $1 million, which makes the top rate 13.3%.
| Rate | Single or married filing separately | Married filing jointly |
|---|---|---|
| 1% | $0 – $11,456 | $0 – $22,912 |
| 2% | $11,456 – $27,157 | $22,912 – $54,314 |
| 4% | $27,157 – $42,861 | $54,314 – $85,722 |
| 6% | $42,861 – $59,498 | $85,722 – $118,996 |
| 8% | $59,498 – $75,197 | $118,996 – $150,394 |
| 9.3% | $75,197 – $384,109 | $150,394 – $768,218 |
| 10.3% | $384,109 – $460,927 | $768,218 – $921,854 |
| 11.3% | $460,927 – $768,213 | $921,854 – $1,536,426 |
| 12.3% | Over $768,213 | Over $1,536,426 |
Example: California tax on $80,000 of 1099 income
Here’s the math for a single self-employed person in Los Angeles with $80,000 of profit and no other income.
| Step | Amount |
|---|---|
| Self-employment tax: $80,000 × 92.35% × 15.3% | $11,304 |
| Adjusted gross income: $80,000 minus half of self-employment tax | $74,348 |
| Federal taxable income: minus the $16,100 standard deduction and $11,650 QBI deduction | $46,599 |
| Federal income tax | $5,344 |
| California taxable income: AGI minus the $5,900 standard deduction (no QBI deduction) | $68,448 |
| California income tax, after the $158 exemption credit | $2,613 |
| Total 2026 tax | $19,260 (24.1%) |
Self-employment tax is the biggest piece, even at this income. Every dollar you write off as a business expense lowers all three taxes, since your self-employment tax, federal income tax, and California income tax are all based on your profit after expenses.
What tax write-offs can I claim?
How to lower your California 1099 tax bill
At $80,000 of profit, every $1,000 of business expenses you deduct cuts about $305 from your total tax. Common write-offs for self-employed people in California include:
- Your phone and internet, for the share you use for work
- Car expenses, using a set rate per mile or your actual costs (compare the two)
- A home office, if you use part of your home regularly and only for work (estimate yours)
- Software, equipment, and supplies you buy for your business
- Health insurance premiums you pay as a self-employed person
- Retirement contributions to a SEP-IRA or Solo 401(k)
Most of these are small purchases spread across a year of bank and card statements, which is where they get missed. See the full list of tax write-offs for self-employed people.
Track and claim every eligible deduction with Keeper
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Try it freeCalifornia estimated tax payments
If you expect to owe $500 or more in California tax for 2026 ($250 if married filing separately) after withholding and credits, you need to make estimated payments with Form 540-ES. California uses an uneven schedule:
| Payment | Share of your California tax | Due date |
|---|---|---|
| 1st | 30% | April 15, 2026 |
| 2nd | 40% | June 15, 2026 |
| 3rd | 0% | No payment due |
| 4th | 30% | January 15, 2027 |
- Federal payments are separate: four equal payments to the IRS on April 15, June 15, September 15, and January 15.
- To avoid a California underpayment penalty, pay at least the smaller of 90% of your 2026 California tax or 100% of your 2025 California tax.
- Higher earners: if your 2025 California income was over $150,000, the prior-year amount rises to 110%. If your 2026 income is $1 million or more, you have to use 90% of your 2026 tax.
Get your payment amounts with the California quarterly tax calculator.
Should you form an LLC or S corp in California?
You don’t need one to work as an independent contractor. A sole proprietor reports 1099 income on Schedule C and pays the taxes above. An LLC or S corp adds California-specific costs:
- LLCs pay an $800 annual franchise tax, including the first year. LLCs with more than $250,000 of California income also pay an LLC fee of $900 to $11,790.
- S corps can make sense once your profit is around $80,000, when the self-employment tax savings get significant. You pay yourself a reasonable salary and take the rest as profit payouts (distributions) that aren’t subject to self-employment tax. California S corps pay 1.5% of net income, with an $800 minimum (waived for the first year).
Run the numbers for your income to see what you’d save.
9 sources
- Tax News: 2026 tax rates and deductions · ftb.ca.gov
- 2026 Form 540-ES instructions · ftb.ca.gov
- 2025 Schedule CA (540) instructions · ftb.ca.gov
- Summary of federal income tax changes (QBI nonconformity) · ftb.ca.gov
- Limited liability company · ftb.ca.gov
- S corporations · ftb.ca.gov
- Disability Insurance Elective Coverage · edd.ca.gov
- IRS releases tax inflation adjustments for tax year 2026 · irs.gov
- Contribution and benefit base · ssa.gov
This article is for informational purposes only and isn’t tax, legal, or financial advice. Tax rules change and depend on your situation, so talk to a tax professional about yours.
