Gig Tax Calculator User Manual

Updated for 2026 (Filing 2025 Taxes)

Mastering the Gig Tax Calculator

Taxes for independent contractors are famously complex. This manual explains exactly what each field in our calculator means and how to maximize your savings.

1. Gross Income

This is your "top-line" revenue. For a driver, it's everything Uber or DoorDash paid you. For a freelancer, it's the total of all invoices paid. Do not subtract any fees or gas yet; the calculator handles that in the next steps.

2. Vehicle Deduction: Standard vs. Actual

The IRS gives you two choices. You must pick one and stick with it for the entire year.

• Standard Mileage (Recommended for most): You simply track your business miles. The rate (72.5¢ per mile in 2026) covers gas, repairs, insurance, and the "depreciation" of your car. It is usually the biggest deduction for high-mileage drivers.
• Actual Expenses: You track every receipt for gas, insurance, lease payments, and repairs. You can also claim Depreciation - the loss in your car's value over time. This is often better if you drive a very expensive, low-mileage vehicle or have massive repair bills.

3. Depreciation (The "Secret" Deduction)

When you use the "Actual Expenses" method, you can write off a portion of your vehicle's purchase price every year. For most gig vehicles, you can use a simplified estimate of 20% of the car's value per year (MACRS 5-year schedule). Example: A $30,000 car could yield a $6,000 deduction in the first year.

4. Home Office Deduction (Simplified Method)

If you use a portion of your home exclusively for business (e.g., a desk for a freelance writer), you can deduct $5 per square foot, up to 300 square feet ($1,500 max). Our calculator uses this simplified IRS method.

5. W-2 / Other Income (Annual)

This is where our calculator gets "smart." If you have a regular day job, enter your salary here. The IRS calculates your taxes progressively; your gig income sits "on top" of your W-2 income, which often puts it into a higher tax bracket (e.g., 22% or 24%).

By entering your W-2 income, the calculator automatically determines your Marginal Tax Rate and applies it specifically to your gig profits, ensuring you save exactly enough for your April tax bill.

6. The QBI Deduction (Qualified Business Income)

This is a massive benefit from the 2017 Tax Cuts and Jobs Act. Most gig workers can deduct 20% of their net profit from their taxable income automatically. Our calculator includes this "trick" in the total savings estimate, potentially saving you thousands in federal income tax.

7. Self-Employment Tax (15.3%)

Unlike W-2 employees, 1099 workers pay the full Social Security and Medicare burden. It is 15.3% of your net earnings. This is why tracking every dollar of deductions is so critical - every $100 deduction saves you at least $15 in SE tax alone.

8. Total Estimated Tax vs. Take-Home Pay

The "Total Estimated Tax" is the most accurate number we provide. It combines your SE Tax, Federal Income Tax (calculated using our smart bracket logic), and State Tax. Your "Take-Home Pay" is what's left in your pocket after the IRS and your state take their share.