Self-employment tax
Employees split Social Security and Medicare with their employer. When you’re self-employed you pay both halves — 15.3% — on 92.35% of your net profit:
The 12.4% Social Security part stops at the $184,500 wage base for 2026; the 2.9% Medicare part has no cap. You can deduct half of SE tax when calculating income tax.
Income tax and the QBI deduction
Your net profit, minus half of SE tax, retirement contributions and self-employed health insurance, is taxed at normal federal rates. Many freelancers also qualify for the 20% qualified business income (QBI) deduction, which this calculator applies in simplified form.
Example
$80,000 of revenue with $10,000 of expenses leaves $70,000 of profit. SE tax is about $9,891, federal income tax about $4,452 after the QBI and standard deductions, and a 5% state tax about $3,253 — roughly $17,600 in total, or $4,400 per quarter.
Quarterly estimated taxes
No one withholds tax from freelance income, so the IRS expects payments four times a year (Form 1040-ES): April 15, June 15, September 15 and January 15. To avoid an underpayment penalty, pay at least 90% of this year’s tax or 100% of last year’s (110% if your AGI was over $150,000).
Ways to lower your tax
- Track every business expense: software, equipment, a home office, mileage, and professional fees.
- Contribute to a SEP-IRA or Solo 401(k) — contributions reduce income tax.
- Deduct self-employed health insurance premiums.
Related Self-Employment & Income Tools
Navigating 1099 self-employment taxes requires budgeting for federal income and 15.3% SE tax. Calculate exact net after-tax income using our Take Home Pay Calculator, evaluate federal tax brackets with the Tax Calculator, track business operating margins via the Business Profit Calculator, and explore pre-tax Solo 401(k) deductions using our 401k Calculator.
Frequently asked questions
How much should I set aside for taxes as a freelancer?
Many freelancers set aside 25–30% of net income. The calculator shows your personal percentage based on your income, deductions and state.
Do I pay self-employment tax if I also have a W-2 job?
Yes, on your freelance profit. But your W-2 wages count toward the Social Security wage base, so if your combined earnings exceed it, the 12.4% portion stops sooner.
When do I have to file?
You must file if your net self-employment earnings are $400 or more, even if you owe no income tax.