About the Self-Employment Tax Calculator
Self-employed individuals — freelancers, contractors, sole proprietors, and gig workers — are responsible for paying both the employee and employer halves of Social Security and Medicare taxes. Unlike W-2 employees who split these costs with their employer, self-employed workers owe the full 15.3% on net earnings. This calculator breaks down every piece instantly and tells you how much to set aside.
How Self-Employment Tax Works
The IRS allows you to reduce your net self-employment income by 7.65% before calculating SE tax. This adjustment (multiplying by 92.35%) accounts for the employer-equivalent deduction. SE tax has two parts:
- Social Security (12.4%) — applied to net SE earnings up to the annual wage base ($184,500 for 2026). If you also have W-2 income that counts toward the wage base, only the remaining room is subject to this portion.
- Medicare (2.9%) — applied to all net SE earnings with no wage base cap. High earners may also owe an additional 0.9% Medicare surtax above $200,000 (single) or $250,000 (MFJ), which this calculator does not include.
Formula
Net SE Earnings = Net Income × 0.9235
SS Applicable = min(Net SE Earnings, Remaining SS Wage Base)
SS Tax = SS Applicable × 0.124
Medicare Tax = Net SE Earnings × 0.029
Total SE Tax = SS Tax + Medicare Tax
Deductible Half = Total SE Tax × 0.50
The Deductible Half
You can deduct 50% of your self-employment tax from gross income as an above-the-line deduction. This reduces your adjusted gross income (AGI) and lowers your federal income tax — even if you take the standard deduction. For a freelancer paying $10,000 in SE tax, this typically saves $1,200–$2,200 in income taxes depending on their bracket.
Quarterly Estimated Tax Payments
Self-employed individuals generally must pay estimated taxes four times a year (due in April, June, September, and January). Setting aside 25–30% of your gross self-employment income as you earn it helps avoid underpayment penalties. Pair this calculator with the Tax Calculator to estimate your combined SE and income tax burden, then feed that number into the Budget Calculator to plan your monthly reserves.
When to Use This Calculator
- Quarterly planning — calculate SE tax on income earned each quarter before making estimated payments
- New freelancers — understand the 15.3% effective SE tax rate before your first filing season surprises you
- Side-hustle earners — estimate additional SE tax on freelance income alongside a W-2 job using the optional W-2 wages field
- Year-end prep — project your final SE tax liability before December 31 and make any remaining estimated payments
- Budgeting — use the suggested 25% set-aside amount to ensure you reserve enough throughout the year
This calculator estimates self-employment tax only. It does not include federal income tax, state taxes, the additional 0.9% Medicare surtax, or other adjustments. Tax laws and thresholds change annually — confirm results with a qualified tax professional or IRS.gov resources.
Frequently Asked Questions
What is self-employment tax?
Self-employment tax (SE tax) covers your Social Security and Medicare contributions. Employees split these with their employer — each pays 7.65% — but self-employed individuals pay both halves, a combined 15.3% on net earnings. However, you only pay SE tax on 92.35% of your net income, and you can deduct half the SE tax from your adjusted gross income.
How is self-employment tax different from income tax?
Self-employment tax is separate from federal and state income tax. SE tax specifically funds Social Security and Medicare. Income tax is calculated on your total taxable income (after the SE deduction and other adjustments) using progressive tax brackets. You will likely owe both, which is why many freelancers set aside 25–30% of gross income to be safe.
Do I owe self-employment tax on side-hustle income?
Yes, if your net self-employment income is $400 or more for the year. The IRS requires you to file Schedule SE and pay SE tax on all net earnings from freelance work, gig work, or any business you run as a sole proprietor or independent contractor — even if it is part-time or a side job.
Why does the calculator multiply income by 92.35%?
The IRS allows you to reduce your net self-employment income by 7.65% before calculating SE tax. This accounts for the fact that employees only pay taxes on wages net of the employer share. So instead of paying 15.3% on 100% of your income, you pay it on 92.35%. The net result is equivalent to paying both the employee and employer halves.
Can W-2 wages reduce my self-employment Social Security tax?
Yes. If you also earned W-2 wages subject to Social Security tax, those count toward the annual wage base ($184,500 for 2026). Only income below the wage base is subject to the 12.4% Social Security portion. If your W-2 wages already meet or exceed the wage base, you will only owe the 2.9% Medicare portion on your self-employment income.
Does this calculator include federal or state income tax?
No. This calculator estimates self-employment tax only — the Social Security and Medicare portions. It does not calculate federal income tax, state income tax, or local taxes. For a combined estimate, use this tool alongside the Tax Calculator to see your full tax picture.
How much should freelancers set aside for taxes?
A common guideline is 25–30% of gross self-employment income for combined SE and income taxes. This calculator shows a 25% set-aside as a starting baseline, but the right amount depends on your income level, deductions, filing status, and state. If you are in a higher income bracket or live in a high-tax state, consider setting aside 30% or more.
