California Self-Employment Tax Guide
What freelancers, gig workers and sole proprietors owe California, how it differs from the federal side, and when to pay it.
California has no self-employment tax of its own. The 15.3% self-employment tax for Social Security and Medicare is federal. What California charges is income tax on your profit, at the same 1% to 12.3% rates as wages, and it wants that tax paid during the year in a front-loaded schedule: 30% by April 15, 40% by June 15, 0% in September and 30% in January.
The two taxes on self-employment income
Federal self-employment tax. You pay both halves of Social Security and Medicare: 15.3% on 92.35% of your net profit. The Social Security part (12.4%) stops at the $184,500 wage base for 2026, counting any W-2 wages first; the Medicare part (2.9%) has no cap. No self-employment tax is due on profit under $400. You pay it on your federal return (Schedule SE).
California income tax. California starts from your federal adjusted gross income, which already has half of the self-employment tax deducted. Your profit is added to any other income and taxed at the regular rates, plus 1% on taxable income over $1,000,000.
A worked example
A single freelancer with $80,000 of net profit and no other income, tax year 2025 California rates:
| Net profit (Schedule C) | $80,000 |
| Federal self-employment tax (15.3% of $73,880) | $11,304 |
| Deductible half of it | −$5,652 |
| California AGI | $74,348 |
| California standard deduction | −$5,706 |
| California taxable income | $68,642 |
| Tax from the rate schedule | $2,875 |
| Personal exemption credit | −$153 |
| California income tax | $2,722 |
Federal income tax comes on top of both. The calculator runs the same steps with your numbers, including W-2 wages from a second job (it leaves out the exemption credit, so its figure is a little higher).
Where California differs from your federal return
- No QBI deduction. The federal 20% qualified business income deduction doesn't exist on the California return, so more of your profit is taxed in California.
- Your own standard deduction. California's is $5,706 for a single filer (tax year 2025), far below the federal figure.
- HSA contributions aren't deductible in California, a common surprise for self-employed people with a high-deductible plan. See our HSA guide.
- Business expenses generally follow the federal rules, but depreciation can differ: California doesn't follow every federal depreciation rule, and the adjustments go on form FTB 3885A.
Estimated payments: the California schedule
Nobody withholds tax from 1099 income, so you pay in installments on Form 540-ES. California's schedule is not the federal 25% a quarter:
| Due | Share of the year's California tax |
|---|---|
| April 15 | 30% |
| June 15 | 40% |
| September 15 | 0% |
| January 15 (next year) | 30% |
You generally must pay estimates if you expect to owe at least $500 ($250 married filing separately) after withholding and credits. To avoid the underpayment penalty, pay at least the lesser of 90% of this year's tax or 100% of last year's (110% if last year's California AGI was over $150,000). Dates that fall on a weekend or holiday move to the next business day. More in our estimated tax guide.
For the example above, the installments would be about $817, $1,089, $0, $817.
SDI and Paid Family Leave
Employees have State Disability Insurance withheld from every paycheck. The self-employed don't, and so they have no SDI or Paid Family Leave coverage unless they buy it. EDD's Disability Insurance Elective Coverage lets you enroll if your net profit is at least $4,600 a year. You must be in the program 6 months before you can claim, and you commit to 2 full calendar years unless you close the business or leave California.
Other California costs to know about
- An LLC or corporation pays at least the $800 annual franchise tax, whether or not it makes money. A sole proprietorship doesn't. See LLC vs. S corp taxes.
- A seller's permit if you sell taxable goods. Services-only businesses usually don't need one. See the seller's permit guide.
- Worker status. If you are really an employee under California's ABC test, the company owes payroll taxes and you shouldn't be paying self-employment tax at all. Check with the AB5 checker.
Frequently Asked Questions
Does California have a self-employment tax?
No. The 15.3% self-employment tax (Social Security and Medicare) is federal only. California taxes your self-employment profit as ordinary income, at the same 1% to 12.3% rates as wages, after you deduct half of the federal self-employment tax.
How much California tax do I pay on 1099 income?
It depends on your total income. In our example, a single filer with $80,000 of profit and no other income owes about $2,722 in California income tax for tax year 2025, roughly 3.4% of profit, on top of $11,304 of federal self-employment tax.
Can I take the 20% QBI deduction on my California return?
No. California does not conform to the federal qualified business income deduction (IRC 199A), so the full profit stays in California taxable income.
When are California estimated taxes due for the self-employed?
April 15 (30%), June 15 (40%), September 15 (0%) and January 15 of the next year (30%). You generally must pay if you expect to owe at least $500 after withholding and credits.
Do self-employed people pay California SDI?
Not unless they opt in. Through EDD's Disability Insurance Elective Coverage you can buy SDI and Paid Family Leave coverage if your net profit is at least $4,600 a year; you must stay in for 2 full calendar years.
This article is for general information only and is not tax advice. Sources: FTB 2025 Tax Rate Schedules, Form 540 booklet and Instructions for Schedule CA (540); FTB 2026 Instructions for Form 540-ES; FTB Schedule K-1 (568) instructions (IRC 199A non-conformity); SSA 2026 contribution and benefit base; IRC 1401 and 1402; EDD Disability Insurance Elective Coverage page.