State Taxes for 1099 Workers: What You Owe Your State

Two tax systems, not one

As a 1099 worker you deal with two tax systems at once:

• Federal: income tax plus self-employment tax of 15.3%. This is what our 1099 tax calculator and most of our guides cover.
• State: income tax only. States do not charge self-employment tax. Many states start their calculation from your federal adjusted gross income, so your Schedule C profit carries over to your state return.

Some cities and counties add their own income tax on top. New York City and Yonkers, for example, have one that you pay together with the New York State tax.

The states with no income tax on wages

If you live and work in one of these states, the federal numbers are the whole story for your income. You may still owe sales tax, property tax or local business fees.

State estimated payments

Nobody withholds state tax from 1099 income either, so most states with an income tax expect quarterly estimated payments, just like the IRS. Each state has its own form, its own threshold and sometimes its own schedule. Two examples for 2026:

California (Form 540-ES). You generally must pay if you expect to owe at least $500 ($250 if married filing separately). The payments are not equal:

Yes, the September payment is zero in California, while the IRS expects a federal payment that day.

New York (Form IT-2105). You generally must pay if you expect to owe $300 or more of New York State tax (or of New York City or Yonkers tax), after withholding and credits. The four equal payments are due on the same days as the federal ones: April 15, 2026, June 15, 2026, September 15, 2026 and January 15, 2027.

Like the IRS, both states protect you from an underpayment penalty if you pay enough based on this year’s tax or last year’s tax. Check your state’s rules for the exact percentages.

If you work in more than one state

• Your home state generally taxes all your income, wherever you earned it.
• Another state may tax the part of your income earned there, for example if you do jobs or deliveries across the border. You may have to file a nonresident return there.
• To avoid paying twice, your home state usually gives you a credit for income tax you paid to the other state.

If you moved during the year, you usually file a part-year resident return in each state. The rules differ from state to state, so check both states’ tax agencies.

Deducting state taxes on your federal return

State income tax you pay on your profit is not a business expense: it does not go on Schedule C. Instead:

• You can deduct it on Schedule A, but only if you itemize. For 2026, the deduction for state and local taxes (SALT) is limited to $40,400 ($20,200 if married filing separately). The limit is reduced if your modified AGI is over $505,000, but not below $10,000.
• Most people take the standard deduction ($16,100 if single in 2026), so for them the state tax deduction does not change anything.
• In a state with no income tax, if you itemize you can choose to deduct your general sales taxes instead of income taxes (you cannot deduct both).
• A state tax on gross receipts tied directly to your business is different: that one does go on Schedule C.

How much to set aside for your state

Add your state’s rate to the federal share in our guide on how much to set aside for taxes. If you are in one of the 9 states without an income tax, the federal share covers your income taxes.

Where to find your state’s rules

The IRS keeps a list of links to every state’s government website, including the tax agency. Look for three things:

1. Whether your state taxes your income, and at what rate.
2. Its estimated payment rules: threshold, form and due dates.
3. Whether you need a business license or registration in your state or city.

For the federal side, our quarterly estimated tax calculator tells you what to pay the IRS each quarter.