Compare self-employment taxes vs employee taxes in Texas. State income tax rate: 0%. See the complete federal + state + SE tax breakdown.
Your only tax burden is federal income tax and self-employment tax.
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Texas has no state income tax, constitutionally prohibited. Combined with a large freelancer economy, it is one of the top states for 1099 contractors.
As a 1099 contractor in Texas, you'll pay federal self-employment tax of 15.3% (on 92.35% of net earnings), federal income tax based on your bracket, and no state income tax. Use the calculator above to see your exact breakdown based on your income level and filing status.
Texas's income tax rate is 0% with a top marginal rate of 0%. Texas has no state income tax, constitutionally prohibited. Combined with a large freelancer economy, it is one of the top states for 1099 contractors.
Self-employment tax is a federal tax of 15.3% (12.4% Social Security + 2.9% Medicare) — it's the same regardless of which state you live in. In Texas, you also pay no state income tax on top of federal income tax and SE tax. The SE tax applies to 92.35% of your net self-employment earnings.
In Texas, a 1099 contractor pays approximately 7.65% more in self-employment tax compared to a W-2 employee on the same gross income. However, 1099 contractors can deduct business expenses (home office, equipment, travel, health insurance) and half of SE tax from AGI. Texas's lack of state income tax means the difference is purely the federal SE tax burden. The right choice depends on your deductions, benefits needs, and career goals.
Yes. If you expect to owe $1,000+ in federal tax, you must make quarterly estimated payments (Form 1040-ES) by April 15, June 15, September 15, and January 15. Since Texas has no state income tax, you only need to worry about federal quarterly payments.