US Self-Employment Tax Calculator
Calculate self-employment tax owed by US freelancers, 1099 contractors, and small business owners. Includes income tax estimate.
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US Self-Employment Tax Guide
What is Self-Employment Tax?
Self-employment tax is the freelancer/sole proprietor equivalent of FICA payroll taxes that W-2 employees pay. Rate: 15.3% of net self-employment earnings (technically 15.3% × 92.35% of net earnings = effective 14.13%). Components: Social Security 12.4% on income up to $176,100 (2025 wage base). Medicare 2.9% on all income with no cap. Additional 0.9% Medicare surtax on SE income over $200,000 (single) / $250,000 (married). Why the higher rate vs W-2 workers? W-2 employees pay 7.65% and their employer pays the other 7.65% on their behalf, whereas the self-employed must cover both halves themselves.
What should I know about Deductions That Reduce Tax?
Several deductions specifically help self-employed: (1) Half of SE tax deductible from income for federal income tax purposes (above-the-line deduction). (2) Self-employed health insurance premiums fully deductible (avoiding the 7.5% AGI medical expense threshold). (3) SEP IRA or Solo 401(k) contributions — Solo 401(k) allows up to $23,500 employee + 25% of net SE earnings as employer contribution (combined max $70,000 for 2025). (4) Home office deduction — Simplified method: $5 per square foot up to $1,500 maximum, a much easier calculation than tracking actual home expenses proportionally, though sometimes worth less than the actual-expense method.
What do I need to know about S Corp Election — The Biggest Tax Saving?
Sole proprietors/single-member LLCs can elect S Corporation taxation (Form 2553). Key benefit: only your SALARY is subject to SE tax. Distributions are NOT subject to SE tax. Example: $120,000 net self-employment income. As sole prop: $120k × 15.3% = $18,360 SE tax. As S Corp paying yourself $70k 'reasonable salary' + $50k distribution: only $70k × 15.3% = $10,710 SE tax. Saving: $7,650/year. Costs of S Corp: payroll service ($500-1,500/year), separate tax return Form 1120-S, must pay reasonable
What's the key thing to understand about Quarterly Estimated Taxes?
Self-employed people must pay quarterly estimated taxes — the IRS doesn't wait until April. Due dates: April 15, June 15, September 15, January 15 (of following year). Penalty for underpayment: typically the federal short-term rate + 3% on the underpayment amount, prorated. Safe harbor rule: avoid penalty by paying either 90% of current year's tax OR 100% of last year's tax (110% if AGI > $150,000). Calculate annual estimated tax, divide by 4, pay each quarter. Most freelancers underestimate Year 1 tax liability specifically, since there's no employer withholding to build the habit of setting money aside automatically.