Self-Employment Tax Calculator
How This Calculator Works
Net SE Income = Gross Income - Business Expenses
SE Tax Base = Net SE Income x 92.35%
Social Security Tax = min(SE Tax Base, $176,100 - W2 Wages) x 12.4%
Medicare Tax = SE Tax Base x 2.9%
Additional Medicare = max(Total Income - $200k, 0) x 0.9%
Total SE Tax = Social Security + Medicare + Additional Medicare
SE Deduction = Total SE Tax / 2
Taxable Income = Net SE Income + Other Income - SE Deduction - Standard Deduction
Federal Tax = Progressive bracket calculation on Taxable IncomeIf you are a freelancer, independent contractor, sole proprietor, or gig worker, you are responsible for paying self-employment (SE) tax in addition to regular income tax. This calculator computes your total tax obligation, including SE tax, federal income tax, state income tax, and the quarterly estimated payments you need to make to avoid IRS penalties.
What Is Self-Employment Tax?
Self-employment tax is the self-employed person's equivalent of the FICA payroll taxes that W-2 employees and their employers split. When you work for an employer, you pay 7.65% (6.2% Social Security + 1.45% Medicare) and your employer pays the matching 7.65%. When you are self-employed, you pay both halves — a total of 15.3% — because you are both the employee and the employer. This is assessed on top of your regular federal and state income taxes.
How SE Tax Is Calculated
The calculation begins with your gross self-employment income minus business expenses, giving you your net self-employment income. The IRS then applies SE tax to 92.35% of your net SE income (this 7.65% reduction mirrors the employer-side deduction that W-2 employees get). The Social Security portion (12.4%) applies only up to the annual wage base of $176,100 in 2025, and if you also have W-2 wages, those count toward the cap first. The Medicare portion (2.9%) applies to all SE income with no cap. If your total income exceeds $200,000 ($250,000 for married filing jointly), an additional 0.9% Medicare surtax applies to the excess.
The SE Tax Deduction
One important benefit: you can deduct half of your self-employment tax when calculating your adjusted gross income (AGI) for federal income tax purposes. This deduction reduces your taxable income, which in turn reduces your income tax. The calculator applies this deduction automatically when computing your federal income tax liability.
Federal Income Tax
After accounting for the SE tax deduction and the standard deduction for your filing status, the remaining taxable income is run through the federal tax brackets. The calculator uses the progressive bracket system, where different portions of your income are taxed at increasing rates from 10% to 37%.
State Income Tax
The calculator provides a simplified state tax estimate based on your selected state's effective income tax rate. States like Texas, Florida, and Washington have no income tax, while states like California and New York have rates exceeding 9%. This is an approximation — actual state tax liability depends on state-specific deductions, credits, and bracket structures.
Estimated Quarterly Payments
Unlike W-2 employees who have taxes withheld from each paycheck, self-employed individuals must make estimated tax payments quarterly. The IRS requires these payments on April 15, June 15, September 15, and January 15 of the following year. The calculator divides your total estimated tax liability (minus any payments already made) by four to show you the recommended quarterly payment amount. Failing to make adequate quarterly payments can result in underpayment penalties.
Frequently Asked Questions
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What You Should Know
The Complete Guide to Self-Employment Taxes
Self-employment taxes are often the biggest financial shock for new freelancers and independent contractors. When you transition from W-2 employment to self-employment, your tax burden typically increases by 7.65% immediately — the employer half of FICA that your company used to pay. Combined with the loss of employer-subsidized benefits, the true cost of self-employment is often 20-30% higher than most people expect.
Planning for Tax Season
The most common mistake self-employed individuals make is failing to set aside money for taxes throughout the year. A good rule of thumb is to immediately transfer 25-30% of every payment you receive into a separate tax savings account. This percentage covers SE tax, federal income tax, and state income tax for most people. If you are in a high-tax state like California or New York, you may need to set aside 35% or more.
The S-Corp Election
One of the most discussed tax strategies for self-employed individuals earning over $50,000-$60,000 in net profit is electing S-Corporation status. As an S-Corp, you pay yourself a reasonable salary (subject to payroll taxes) and take remaining profits as distributions (not subject to SE tax). For example, if your business nets $150,000 and your reasonable salary is $80,000, you save SE tax on the $70,000 in distributions — potentially $10,000 or more per year. However, S-Corp status adds administrative complexity and costs (payroll processing, additional tax filings), so it is not beneficial for everyone.
Retirement Savings Advantages
Self-employed individuals actually have access to more generous retirement account options than most W-2 employees. A Solo 401(k) allows contributions of up to $23,500 as an employee (2025 limit) plus up to 25% of net self-employment earnings as an employer contribution, for a combined maximum of $69,000 per year. A SEP-IRA allows contributions of up to 25% of net self-employment earnings. These contributions reduce your taxable income, providing immediate tax savings while building long-term retirement wealth.