Self-Employment Tax Calculator
Calculate your exact self-employment tax, federal income tax, and take-home pay. Updated for 2024 IRS rates.
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Try Eonebill Free →Understanding Self-Employment Tax: A Complete Guide for Freelancers
If you're self-employed — as a freelancer, independent contractor, or small business owner — you're responsible for paying self-employment (SE) tax. This is essentially the Social Security and Medicare taxes that employees and employers normally split. Since you're your own employer, you pay both portions.
How the 15.3% SE Tax Works
The self-employment tax rate is 15.3%, which consists of two parts: Social Security (12.4%) and Medicare (2.9%). Social Security tax applies only to your first $168,600 of net earnings in 2024 — anything above that amount is not subject to Social Security tax. Medicare tax, however, applies to all your net earnings with no upper limit.
There's also an Additional Medicare Tax of 0.9% that kicks in when your self-employment earnings exceed $200,000 (for single filers) or $250,000 (for married filing jointly). This means high-earning freelancers can face a combined SE tax rate of 16.2% on earnings above those thresholds.
The 92.35% Rule
Here's something many freelancers miss: you don't pay SE tax on 100% of your net earnings. The IRS allows you to exclude 7.65% of your net earnings, meaning only 92.35% is subject to SE tax. This accounts for the employer-equivalent portion of the SE tax that you can deduct. In practice, if you earn $100,000 net from self-employment, only $92,350 is subject to SE tax — which brings the effective SE tax rate down from 15.3% to about 14.13%.
Quarterly Estimated Taxes
Unlike employees who have taxes withheld from every paycheck, self-employed individuals must pay estimated taxes quarterly. The IRS expects you to pay taxes as you earn income throughout the year. If you expect to owe at least $1,000 in taxes, you should make quarterly payments using Form 1040-ES. Missing these payments can result in penalties and interest, even if you ultimately have a refund when you file.
The four due dates are: April 15, June 15, September 15, and January 15 of the following year. If a date falls on a weekend or holiday, the deadline moves to the next business day.
Deducting Half of SE Tax
When calculating your federal income tax, you can deduct half of your self-employment tax from your gross income. This reduces your adjusted gross income (AGI) and thus your income tax bill. For example, if you owe $8,000 in SE tax, you can deduct $4,000 from your income before calculating income tax. This deduction only applies to income tax — it does not reduce the amount of SE tax you owe.
Expenses That Reduce Your SE Tax
Since SE tax is calculated on your net self-employment income (gross income minus business expenses), increasing your legitimate business deductions is the most effective way to reduce your SE tax burden. Track every deductible expense carefully:
- Home office deduction — a portion of your rent/mortgage, utilities, and internet based on the square footage of your dedicated workspace
- Equipment and software — computers, cameras, design software, project management tools
- Professional services — accounting, legal fees, business consulting
- Marketing — website hosting, advertising, business cards
- Health insurance premiums — you can deduct 100% of health insurance for yourself and your family from your net earnings (not as a business expense, but as an AGI deduction)
- Retirement contributions — Solo 401(k), SEP-IRA, or SIMPLE IRA contributions reduce your taxable income but not your SE tax base
State Taxes and SE Income
Most states also tax self-employment income, though the rules vary widely. Some states, like Texas, Florida, and Washington, have no state income tax at all. Others, like California and New York, have progressive state income tax brackets that can add significantly to your tax burden. Always factor in your state's tax treatment when evaluating whether to work as a freelancer or employee.
Eonebill Makes SE Tax Easier
Keeping track of income, expenses, and estimated tax payments can feel like a second job. Eonebill automates income tracking as you invoice clients, logs deductible expenses, and calculates your estimated quarterly taxes so you're never caught off guard at tax time. Pair it with our professional invoice templates to get paid faster and track your earnings in one place.
Frequently Asked Questions
Self-employment tax is a Social Security and Medicare tax imposed on freelancers, independent contractors, and small business owners. It covers the employer and employee portions of these taxes that would normally be split between a worker and employer. The current rate is 15.3% — 12.4% for Social Security on earnings up to $168,600 (2024), and 2.9% for Medicare on all earnings, plus an additional 0.9% Medicare tax on earnings over $200,000 for single filers.
Self-employment tax is calculated on 92.35% of your net self-employment earnings (the remaining 7.65% represents the employer-equivalent deduction). Social Security tax applies at 12.4% up to the wage base limit ($168,600 in 2024), and Medicare tax applies at 2.9% on all earnings with no cap. An additional 0.9% Medicare tax applies to earnings above $200,000 (single) or $250,000 (married filing jointly).
Yes. You can deduct half of your self-employment tax when calculating your adjusted gross income (AGI). This reduces your income tax liability. For example, if your SE tax is $5,000, you can deduct $2,500 from your income, which saves you money at your marginal tax rate. This deduction is automatic if you use Schedule SE to file.
Having a 401(k) does not exempt you from self-employment tax. Your net self-employment earnings are still subject to SE tax regardless of retirement contributions. However, contributing to a Solo 401(k) or SEP-IRA reduces your taxable income for income tax purposes (not SE tax), which can offset some of the SE tax burden. The SE tax is calculated on your net earnings before retirement deductions.
The primary legal way to reduce self-employment tax is to legitimately reduce your net earnings — which means increasing your business expenses. Common deductions include home office expenses, equipment, software, professional development, health insurance premiums (for self-employed), and retirement contributions. Note that the SE tax deduction (half of SE tax) is automatic but does not reduce the SE tax base. Quarterly estimated tax payments are due four times a year to avoid penalties.
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