General tax education, not tax advice. Self-employment tax is Social Security and Medicare on net profit, not a second income-tax rate you apply to the 1099. Confirm IRS Topic 554, Schedule SE instructions, Publication 463, Notice 2026-10, and Announcement 2026-11 for the year you file. A licensed professional should review mixed W-2-plus-gig years and any additional Medicare tax.
The 1099 is not the tax. Which form arrives does not change the stack: Schedule C profit, then Schedule SE, then income tax on what is left. Drivers who multiply 15.3% by the 1099 box are paying a tax that was never written that way.
Mileage comes off first. SE tax is computed on net earnings from self-employment. A dated business-mile log is how that net gets smaller. A January reconstruction is how it stays large.
The short version: SE tax is 15.3% (12.4% Social Security + 2.9% Medicare) on 92.35% of Schedule C profit after ordinary expenses, including standard mileage. It is not income tax. File Schedule SE when net earnings are $400 or more. The 2026 Social Security wage base is $184,500. Deduct one-half of SE tax on Schedule 1 — that is the employer-equivalent half, not a wipe. Set aside 25–30% of each payout as a starting habit for income tax plus SE tax.
Step 1: Separate SE tax from income tax
SE tax is Social Security + Medicare for people with no W-2 withholding on the gig. The combined rate is 15.3% = 12.4% Social Security + 2.9% Medicare (IRS Topic 554). It is not income tax. You can owe both. A W-2 job withholds FICA on the employee wages; Uber, Lyft, DoorDash, and Flex generally withhold nothing on the contractor side.
File Schedule SE with Form 1040 when net earnings from self-employment are $400 or more. That is a filing trigger for the SE computation, not a $400 exemption that zeros the tax, and not permission to skip Schedule C if you earned less. Confirm Topic 554 and the current Schedule SE instructions if you are reading this after a later revision.
Step 2: Apply 15.3% to 92.35% of net profit, not the 1099
The taxable base is 92.35% of net SE earnings — Schedule C profit after ordinary expenses, including the standard mileage deduction. The 92.35% factor is the statutory stand-in for the employer-equivalent half already being “paid” on the way to the 15.3%. Do not apply 15.3% to the 1099 gross. Do not apply it to bank deposits. Do not apply it to Box 1a of a 1099-K and call it a day.
Illustration only, not a promise and not your return:
| Line (illustration) | Amount |
|---|---|
| 1099 gross (example) | $40,000 |
| Mileage (example; nothing else) | − $8,000 |
| Schedule C net | $32,000 |
| × 0.9235 | $29,552 |
| × 15.3% SE tax | about $4,521 |
Change the mileage and the SE tax moves. Change nothing else and 15.3% of $40,000 would have been the wrong first multiplication. Which 1099 you received — NEC, K, both, or neither — is a reporting question covered in 1099-K vs 1099-NEC for gig drivers. It does not replace this net-profit math.
Step 3: Watch the Social Security wage base and the deductible half
The 2026 Social Security contribution and benefit base is $184,500 (SSA). Combined W-2 wages + SE earnings: the 12.4% Social Security portion stops at the base. Medicare (2.9%) has no cap.
An additional 0.9% Medicare tax may apply above $200,000 single / $250,000 married filing jointly. That is a possible extra on high combined wages and SE earnings, not a reason to panic at $40,000 of DoorDash. Confirm the current IRS instructions if you are near those lines.
Deduct one-half of SE tax as an adjustment to income: Schedule SE → Schedule 1. That is the employer-equivalent half. It lowers adjusted gross income. It is not a credit that wipes the tax you just computed on Schedule SE. You still pay the full SE tax; you get an above-the-line deduction for half of it.
Step 4: Use mileage as the usual lever, with a five-field log
For drivers, mileage is the ordinary lever that changes the net Schedule SE sees. 2026 business rates (Notice 2026-10 / Announcement 2026-11):
- 72.5¢ per business mile driven January 1 through June 30
- 76¢ per business mile driven July 1 through December 31
Business miles only, by trip date. Publication 463 still wants a contemporaneous five-field log (date, destination or route, business purpose, miles, plus total miles on the vehicle). Gas is already inside the cents if you use the standard mileage rate. Claiming gas again is how the lever breaks. The form lines are in how to claim car expenses on Schedule C. What still stacks on top of the rate is in write-offs that stack with mileage. The log habit is how to keep an IRS-ready mileage log. First-year method choice is standard mileage vs. actual expenses.
Step 5: Set aside for quarterlies — income tax plus SE tax
If you will owe $1,000 or more for the year after withholding and credits, you generally pay quarterly estimates. Gig pay with no withholding almost always crosses that line once there is real profit. A working habit: move 25–30% of each payout the day it lands. That band is a starting habit meant to cover income tax plus SE tax, not a promise and not your bracket.
Remaining 2026 income from September through December is due January 15, 2027. Safe harbor: pay 100% of last year’s total tax in four timely estimates (110% if AGI was high enough) and the underpayment penalty is capped even if 2026 profit exploded. How the set-aside band is built is in how much to set aside for taxes as a 1099 worker. The September 15 mechanics are in the Q3 deadline guide and the 30-minute Q3 prep.
Classify trips the same day so net profit — and the SE tax on that net — is not guessed in April. Mileage only shrinks the estimate if the miles are already dated.
SE tax follows net profit. Net profit follows dated miles.
TaxMiles: Mileage Tracker auto-detects trips and lets you classify them the same day so 72.5¢ / 76¢ attach to real dates and Schedule C net is not an April reconstruction. Not MileIQ. Not Everlance. Not Mileage Tracker for Taxes (id 6758426140). Free plan is 40 trips a month; Pro is $5.99/month, $39.99/year, or $79.99 lifetime.
Download TaxMiles FreeFrequently Asked Questions
Is self-employment tax the same as income tax?
No. SE tax is Social Security + Medicare on 92.35% of net SE earnings (Topic 554). Income tax is a separate computation. You can owe both. Nothing on a typical gig 1099 is withholding for either one.
Do I pay SE tax if I also have a W-2 job?
Usually yes, on the gig profit. The W-2 already ran FICA on those wages. Schedule C still goes through Schedule SE. Combined W-2 + SE: Social Security stops at the 2026 base of $184,500; Medicare does not.
Does mileage reduce SE tax?
Yes, because the base is net profit after ordinary expenses. Standard mileage is the usual driver expense. Business miles only, by trip date, five fields (Pub 463). Details: Schedule C car expenses.
What is the $400 rule?
File Schedule SE when net earnings from self-employment are $400 or more. It is a filing trigger, not a $400 free slice and not a reason to skip reporting the income.
Can I deduct half of SE tax?
Yes: one-half of SE tax is an adjustment to income (Schedule SE → Schedule 1). Employer-equivalent half. Not a credit that erases the tax.
Related reading: 1099-K vs 1099-NEC for gig drivers, Schedule C car expenses, write-offs that stack with mileage, IRS-ready mileage log, standard mileage vs. actual expenses, how much to set aside for 1099 taxes, September 15 estimated tax deadline, and TaxMiles on the web.
This article is general tax education for U.S. federal Schedule C / Schedule SE filers, not legal, tax, or accounting advice and not a guarantee of any tax, deduction, or estimate. IRS Topic 554, Schedule SE, Publication 463, Notice 2026-10, Announcement 2026-11, and the Social Security contribution and benefit base can change; read the current IRS and SSA sources or work with a licensed professional. The $40,000 / $8,000 walkthrough is an illustration only. TaxMiles: Mileage Tracker (App Store id 6758579463, seller Gigabyte LLC) is not affiliated with the IRS, and is not MileIQ, Everlance, or Mileage Tracker for Taxes (id 6758426140).