How do taxes work if I have both a W-2 job and 1099 side income?

You combine them on one return, but they're taxed differently along the way. Your W-2 job has income, Social Security, and Medicare taxes withheld automatically. Your 1099 side income has nothing withheld, and it owes both income tax and self-employment tax on its net profit (after business deductions). The two add together to set your overall bracket. A handy trick: instead of making separate quarterly estimated payments on the side income, you can increase the withholding on your W-2 paycheck (via a new W-4) to cover the extra tax — withholding is treated as paid evenly through the year, which helps you dodge underpayment penalties. Track your side-business expenses to lower its taxable profit. And note your W-2 wages count toward the Social Security wage base ($176,100 for 2025), which can reduce the Social Security portion owed on side income.