Tennessee 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 Tennessee is subject to two income taxes, both federal: 15.3% self-employment tax and 10% to 37% income tax. Tennessee has no state income tax.
- Set aside 20–25% 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 18.6% of profit at $40,000 to 26.7% at $200,000.
- Tennessee’s business tax starts at $100,000 in sales. Below that, most self-employed people just need a $15 minimal activity license once they bill more than $3,000 in a county or city.
- LLCs pay a tax that sole proprietors don’t. A Tennessee LLC owes franchise and excise tax of at least $100 a year, plus a $300 annual report fee.
- Quarterly payments go only to the IRS. Tennessee has no estimated income tax. Federal quarterly payments are due April 15, June 15, and September 15, 2026, and January 15, 2027.
How much tax do 1099 workers pay in Tennessee?
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 |
|---|---|---|---|---|
| $40,000 | $7,427 | 18.6% | $5,652 | $1,775 |
| $60,000 | $12,037 | 20.1% | $8,478 | $3,559 |
| $80,000 | $16,647 | 20.8% | $11,304 | $5,344 |
| $100,000 | $22,365 | 22.4% | $14,130 | $8,235 |
| $150,000 | $37,608 | 25.1% | $21,194 | $16,413 |
| $200,000 | $53,431 | 26.7% | $28,234 | $25,196 |
Married filing jointly, one self-employed spouse, 2026
| 1099 profit | Total tax | % of profit | Self-employment tax | Federal income tax |
|---|---|---|---|---|
| $40,000 | $6,050 | 15.1% | $5,652 | $398 |
| $60,000 | $10,363 | 17.3% | $8,478 | $1,885 |
| $80,000 | $14,854 | 18.6% | $11,304 | $3,550 |
| $100,000 | $19,464 | 19.5% | $14,130 | $5,335 |
| $150,000 | $30,990 | 20.7% | $21,194 | $9,795 |
| $200,000 | $44,706 | 22.4% | $28,234 | $16,472 |
How Tennessee taxes 1099 income
Tennessee doesn’t tax wages or self-employment income, and its old tax on interest and dividends ended in 2021. If you’re a freelancer, independent contractor, gig worker, or solo business owner in Tennessee, your net profit (1099 income minus business expenses) is taxed two ways, both federal:
- 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.
With no state income tax, Tennessee is one of the lower-tax states for self-employed people. At $80,000 of profit, a single filer pays $16,647, about $2,613 less than in California and the same as in Texas.
Tennessee business tax for self-employed people
Tennessee’s business tax is charged on gross sales, what you bill before expenses, and it applies to sole proprietors as well as LLCs. Most small businesses don’t owe it:
- $3,000 or less in a county or city: no license needed.
- More than $3,000 but under $100,000: get a minimal activity license for $15 from your county clerk, and from your city if it charges business tax. You don’t file a business tax return.
- $100,000 or more: get a standard business license and file a business tax return by April 15 for the prior year. Most services are taxed at 0.1875% of gross sales, or $187.50 per $100,000, with a $22 minimum. Cities that charge business tax add their own amount, usually at the same rate.
Some services are exempt, including accounting and bookkeeping, engineering, architecture, legal, and medical services.
Example: tax on $80,000 of 1099 income in Tennessee
Here’s the math for a single self-employed person in Nashville with $80,000 of profit and no other income, who billed $95,000 before expenses.
| Step | Amount |
|---|---|
| Self-employment tax: $80,000 × 92.35% × 15.3% | $11,304 |
| $80,000 minus half of self-employment tax | $74,348 |
| Income the IRS taxes: $74,348 minus the $16,100 standard deduction and $11,650 QBI deduction | $46,599 |
| Federal income tax | $5,344 |
| Tennessee business tax: $95,000 in sales is under the $100,000 threshold | $0 |
| Total 2026 tax | $16,647 (20.8%) |
Self-employment tax is about two-thirds of the bill. Every dollar you write off as a business expense lowers both federal taxes, since they’re based on your profit after expenses. This person also pays $15 for a minimal activity license.
What tax write-offs can I claim?
How to lower your Tennessee 1099 tax bill
At $80,000 of profit, every $1,000 of business expenses you deduct cuts about $231 from your total tax. Common write-offs for self-employed people in Tennessee 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
Keeper scans your accounts for write-offs and files your return — with tax pros reviewing every one.
Try it freeQuarterly estimated taxes in Tennessee
Tennessee has no estimated income tax, so your quarterly payments go only to the IRS. You generally need to pay if you expect to owe $1,000 or more for 2026 after withholding and credits.
| Payment | Covers income earned | Due date |
|---|---|---|
| 1st | January 1 to March 31, 2026 | April 15, 2026 |
| 2nd | April 1 to May 31, 2026 | June 15, 2026 |
| 3rd | June 1 to August 31, 2026 | September 15, 2026 |
| 4th | September 1 to December 31, 2026 | January 15, 2027 |
- To avoid an underpayment penalty, pay at least the smaller of 90% of your 2026 tax or 100% of your 2025 tax.
- Higher earners: if your 2025 income was over $150,000 ($75,000 married filing separately), the prior-year amount rises to 110%.
- Franchise and excise tax has its own estimates, but only once an LLC or corporation owes $5,000 or more a year, which is rare for a one-person business.
Get your federal payment amounts with the Tennessee quarterly tax calculator.
Do self-employed people in Tennessee charge sales tax?
Usually not. Tennessee’s sales tax doesn’t apply to most services, like consulting, writing, design, or coaching. It does apply to physical goods, at a 7% state rate plus up to 2.75% in local tax, and to software your customers access online. Digital products like ebooks, music, and video downloads are taxed at 7% plus a flat 2.5% local rate.
Should you form an LLC or S corp in Tennessee?
You don’t need one to work as an independent contractor. If you work for yourself without forming a business, you report 1099 income on Schedule C, part of your regular tax return, and pay the taxes above.
- LLCs cost more in Tennessee than in most states. It’s $300 to form and at least $300 a year for the annual report. A one-person LLC also has to file a franchise and excise tax return each year. The excise tax usually comes to $0, because income you already pay self-employment tax on is deducted, but the franchise tax is at least $100.
- 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. In Tennessee, though, S corps pay the 6.5% excise tax on profit left after your salary, which cuts into those savings.
Run the numbers for your income to see what you’d save.
9 sources
- Business tax manual (June 2026) · tn.gov
- Business tax registration and licensing · tn.gov
- Franchise and excise tax manual (June 2026) · tn.gov
- F&E-4: filing requirement for an LLC that files federally as an individual · revenue.support.tn.gov
- Professional privilege tax · tn.gov
- Sales and use tax rates · revenue.support.tn.gov
- Business forms and fees (Tennessee Secretary of State) · sos.tn.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.
