How self-employment tax works
When you work for yourself, you pay both the employee and employer halves of Social Security and Medicare: 15.3% instead of the 7.65% taken from a paycheck. It's charged on 92.35% of your net profit, which mirrors the employer half being deductible for a business. You then deduct half of the tax when working out your income tax.
Example: a single freelancer with $80,000 of profit has an SE base of $73,880 and owes $11,303.64 in self-employment tax. Half of that, $5,651.82, is deducted, then the $16,100 standard deduction and an $11,649.64 QBI deduction leave $46,598.54 of taxable income and $5,343.83 of income tax. Total federal tax is $16,647.47, about 21% of profit, or $4,161.87 a quarter.
Quarterly estimated tax deadlines for 2026
| Payment | Covers | Due |
|---|---|---|
| 1 | January to March | April 15, 2026 |
| 2 | April and May | June 15, 2026 |
| 3 | June to August | September 15, 2026 |
| 4 | September to December | January 15, 2027 |
Pay through IRS Direct Pay or your IRS online account. To avoid an underpayment penalty, pay at least 90% of this year's tax or 100% of last year's (110% if your income was over $150,000), spread across the four dates.
Ways to lower self-employment tax
- Track every business expense. Each dollar of expense cuts both SE tax and income tax.
- Retirement savings: a SEP IRA or solo 401(k) lowers income tax, though not SE tax.
- Health insurance premiums you pay as a self-employed person are deductible from income.
- An S corporation can reduce SE tax at higher profits by splitting income into salary and distributions, but adds payroll costs and paperwork.
Have a regular job too? Use the paycheck calculator for that side.
Frequently asked questions
How much should I set aside for taxes as a 1099 worker?
About 25% to 30% of profit covers federal self-employment and income tax for most people, plus your state's income tax. The calculator shows your exact figure.
Is self-employment tax the same as income tax?
No. Self-employment tax is Social Security and Medicare. Income tax is separate and is based on your taxable income after deductions. Freelancers pay both.
Do I pay self-employment tax if I made under $400?
No. If your net self-employment earnings are under $400 for the year, you don't owe self-employment tax, though the income can still be subject to income tax.
What is the QBI deduction?
The qualified business income deduction lets most sole proprietors deduct up to 20% of their business profit (after the SE tax deduction) from taxable income. The One Big Beautiful Bill Act made it permanent.
Was this calculator helpful?