This guide is for US freelancers and independent contractors who need a clear answer to what self-employment tax is and how to estimate it with a self-employment tax calculator.
Self-employment tax is the Social Security and Medicare tax you pay on net self-employment income. Employees share those taxes with their employer; freelancers typically pay both portions. Use a calculator (like Round’s tax estimator) to project SE tax, income tax, and quarterly amounts — then confirm filings with the IRS self-employment tax page or a CPA. This is educational planning content, not tax advice.
What is self-employment tax?
When you earn as an employee, your paycheck withholds Social Security and Medicare, and your employer pays a matching share. When you freelance, there is no employer match — so the IRS collects the equivalent through self-employment (SE) tax on your net profit from business, reported on Schedule SE (Form 1040).
SE tax is separate from federal income tax. You may owe both. Net profit generally means business income minus allowable business expenses — which is why expense tracking and a simple P&L matter before you open a calculator. SE tax generally applies once net earnings from self-employment reach $400 (confirm current IRS threshold).
Rate and how it’s calculated
Per the IRS, the self-employment tax rate is 15.3%: 12.4% Social Security and 2.9% Medicare. On Schedule SE, that rate is typically applied to 92.35% of net earnings (an adjustment that mirrors the employer-side FICA treatment). Social Security applies only up to an annual wage base the IRS updates each year; Medicare generally has no wage base. An Additional Medicare Tax of 0.9% may apply above income thresholds.
You can usually deduct the employer-equivalent portion of SE tax when figuring adjusted gross income — that lowers income tax, not the SE tax itself (IRS). Exact wage-base and threshold figures change by tax year — verify before you file.
| Piece | Typical planning figure | Notes |
|---|---|---|
| Net earnings base | 92.35% of net profit | Schedule SE adjustment |
| Social Security portion | 12.4% | Subject to annual wage base |
| Medicare portion | 2.9% | No wage base; extra 0.9% may apply at high income |
| Combined SE tax rate | 15.3% | Applied to net earnings from SE |
| SE tax deduction | ~50% of SE tax | Above-the-line for AGI; confirm on return |
| Income tax | Varies by bracket | Separate from SE tax |
Worked example (illustrative)
Suppose your Schedule C net profit is $50,000 and you are under the Social Security wage base:
| Step | Math | Result |
|---|---|---|
| Net earnings from SE | $50,000 × 92.35% | $46,175 |
| Social Security | $46,175 × 12.4% | $5,726 |
| Medicare | $46,175 × 2.9% | $1,339 |
| Total SE tax | $5,726 + $1,339 | $7,065 |
| Approx. deductible half | $7,065 ÷ 2 | $3,533 |
Rounded illustrative example for planning only — your CPA or tax software will compute the return with current-year limits.
Quarterly estimated taxes
Freelancers often pay estimated taxes four times a year because nothing is withheld from client payments. Missing estimates can trigger underpayment penalties even if you settle up at filing. See the IRS guide to estimated taxes.
Practical approach
- Track year-to-date income and expenses monthly.
- Run a calculator after big invoices land.
- Set aside a fixed % of each payment in a separate tax account (many freelancers start around 25–35% as a rough buffer — adjust to your bracket).
- Pay estimates on the IRS quarterly calendar for your tax year.
Demand for “self employment tax” searches rises sharply near filing season — plan set-asides earlier so Q1 is not a surprise.
How to use a self-employment tax calculator
- Gather net income inputs — revenue minus business expenses (or use your latest P&L).
- Enter filing status and other income if the tool asks — W-2 side income changes total tax.
- Review SE tax + income tax estimates and suggested quarterly amounts.
- Adjust cash set-asides — if the estimate rose, increase the % you save from each invoice.
Try Round’s freelance tax estimator. For a clean income/expense snapshot first, use the P&L generator.
Records freelancers should keep
- Invoices and payment confirmations
- Receipts categorized for tax (software, contractors, travel, etc.)
- Monthly profit summaries
- Prior-year returns and estimated payment confirmations
Round is freelance finance software — invoices, expenses, and CPA-ready exports — not a tax-filing product and not a QuickBooks replacement. Export clean records; let a CPA or tax software file.
Next step
Estimate your self-employment tax with a calculator, set aside cash each time you get paid, and keep invoices plus receipts export-ready. That is enough for most solo freelancers until a CPA says you need full accounting software.