What is Self-Employment Tax?
Self-employment tax is the Social Security and Medicare tax that self-employed people pay. When you're an employee, your employer pays half of these taxes. As a freelancer, you pay both halves.
| Tax | Employee Pays | Self-Employed Pays |
|---|---|---|
| Social Security | 6.2% | 12.4% |
| Medicare | 1.45% | 2.9% |
| Total | 7.65% | 15.3% |
Important
Self-employment tax is in addition to your regular income tax. A freelancer earning $100,000 might pay $15,300 in SE tax plus $15,000-$20,000 in income tax.
How to Calculate Self-Employment Tax
Here's the formula:
- Calculate net self-employment income (revenue - expenses)
- Multiply by 92.35% (this accounts for the employer-equivalent portion)
- Multiply by 15.3% for SE tax
Example: $80,000 Net Income
| Step | Calculation | Amount |
|---|---|---|
| Net income | - | $80,000 |
| Taxable SE income | $80,000 × 92.35% | $73,880 |
| SE Tax | $73,880 × 15.3% | $11,304 |
Calculate Your Self-Employment Tax
Get an accurate estimate of your tax liability.
SE Tax Calculator ï¿?/a>Quarterly Estimated Tax Payments
Unlike employees who have taxes withheld from each paycheck, freelancers must pay estimated taxes quarterly.
2026 Quarterly Due Dates
| Quarter | Income Period | Due Date |
|---|---|---|
| Q1 | Jan 1 - Mar 31 | April 15, 2026 |
| Q2 | Apr 1 - May 31 | June 16, 2026 |
| Q3 | Jun 1 - Aug 31 | September 15, 2026 |
| Q4 | Sep 1 - Dec 31 | January 15, 2027 |
How Much to Pay Quarterly
To avoid penalties, pay at least:
- 100% of last year's tax (110% if income over $150,000), OR
- 90% of this year's tax
A simple approach: Set aside 25-30% of every payment you receive for taxes.
Tax Deductions for Freelancers
Reduce your taxable income with these common deductions:
Home Office Deduction
- Simplified method: $5 per square foot, up to 300 sq ft ($1,500 max)
- Regular method: Actual expenses × percentage of home used for business
Business Expenses
- Computer and equipment
- Software and subscriptions
- Office supplies
- Professional development and courses
- Business travel
- Marketing and advertising
- Professional services (accountant, lawyer)
Health Insurance Deduction
Self-employed individuals can deduct 100% of health insurance premiums for themselves and their family. This is an "above the line" deduction, meaning you get it even if you don't itemize.
Retirement Contributions
- SEP IRA: Up to 25% of net SE income (max $70,000 in 2026)
- Solo 401(k): Up to $70,000 total (2026)
- Traditional IRA: Up to $7,000 ($8,000 if 50+)
The QBI Deduction
The Qualified Business Income (QBI) deduction lets you deduct up to 20% of your net self-employment income. This can significantly reduce your income tax (not SE tax).
Example: Full Tax Calculation
Let's calculate taxes for a freelancer with $100,000 gross income:
| Item | Amount |
|---|---|
| Gross Income | $100,000 |
| Business Expenses | -$15,000 |
| Net SE Income | $85,000 |
| SE Tax (15.3% × 92.35%) | $12,012 |
| 1/2 SE Tax Deduction | -$6,006 |
| Health Insurance Deduction | -$6,000 |
| SEP IRA Contribution | -$15,000 |
| Adjusted Gross Income | $57,994 |
| QBI Deduction (20%) | -$11,599 |
| Standard Deduction (Single) | -$14,600 |
| Taxable Income | $31,795 |
| Federal Income Tax | ~$3,600 |
| Total Federal Tax | ~$15,612 |
Effective tax rate: 15.6% on $100,000 gross income (before state taxes).
Retirement Options for Freelancers
Solo 401(k)
- Best for: High earners who want to maximize contributions
- 2025 Limit: $23,500 employee + 25% employer = up to $69,000
- Pros: Highest contribution limits, Roth option available
SEP IRA
- Best for: Simple setup, variable income
- 2025 Limit: 25% of net SE income, up to $69,000
- Pros: Easy to set up, flexible contributions
SIMPLE IRA
- Best for: Freelancers with employees
- 2025 Limit: $16,500 + 3% match
- Pros: Lower admin costs than 401(k)
Common Freelancer Tax Mistakes
- Not paying quarterly - Results in penalties and interest
- Mixing personal and business expenses - Use separate accounts
- Not tracking mileage - Keep a log for business driving
- Missing deductions - Track every business expense
- Not saving enough - Set aside 25-30% of income
- Forgetting state taxes - Many states have income tax too
Estimate Your Tax Liability
Plan ahead with our self-employment tax calculator.
Calculate Now ï¿?/a>Tax Checklist for Freelancers
- Open a separate business bank account
- Track all income and expenses
- Save 25-30% of income for taxes
- Pay quarterly estimated taxes
- Maximize deductions (home office, health insurance, retirement)
- Consider hiring a tax professional
- Keep records for at least 7 years