What Is Self-Employment Tax?

When you work as an employee, your employer pays half of your Social Security and Medicare taxes — collectively known as FICA taxes — and withholds the other half from your paycheck. When you are self-employed, you pay both halves yourself. This is called self-employment tax, and it catches many new freelancers completely off guard.

The self-employment tax rate in 2025 is 15.3%. This consists of 12.4% for Social Security and 2.9% for Medicare. However, self-employment tax is calculated on 92.35% of your net self-employment income, not the full amount. This adjustment accounts for the fact that employees only pay tax on their share of FICA, and it slightly reduces the self-employment tax burden.

How to Calculate Your Self-Employment Tax

The calculation works as follows. Take your net freelance income after business expenses. Multiply by 92.35% to get your self-employment tax base. Then multiply by 15.3% to get your self-employment tax. For example, on a net income of $60,000, the calculation is $60,000 multiplied by 0.9235 equals $55,410, then multiplied by 0.153 equals $8,478 in self-employment tax.

The good news is that you can deduct half of your self-employment tax from your gross income before calculating your federal income tax. This deduction — equal to 7.65% of your net self-employment income — partially offsets the burden of paying both sides of the FICA tax.

Federal Income Tax for Freelancers in 2025

In addition to self-employment tax, freelancers pay federal income tax on their taxable income using the same progressive brackets as employees. For 2025, the brackets for single filers are 10% on income up to $11,925, 12% on income from $11,926 to $48,475, 22% on income from $48,476 to $103,350, 24% on income from $103,351 to $197,300, 32% on income from $197,301 to $250,525, 35% on income from $250,526 to $626,350, and 37% on income above $626,350.

Freelancers also benefit from the standard deduction of $14,600 for single filers in 2025, which reduces taxable income before the brackets are applied. Many freelancers also qualify for the Qualified Business Income (QBI) deduction, which allows eligible self-employed individuals to deduct up to 20% of their qualified business income.

State Income Tax

State income tax varies significantly across the US. Nine states have no state income tax at all — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. California has the highest state income tax rate at 13.3% for top earners. Most states fall somewhere between 3% and 7% for middle-income freelancers.

Quarterly Estimated Tax Payments

Unlike employees who have taxes withheld from each paycheck, freelancers must pay estimated taxes quarterly. The IRS requires quarterly payments if you expect to owe at least $1,000 in tax for the year. The 2025 payment deadlines are April 15 for Q1, June 16 for Q2, September 15 for Q3, and January 15, 2026 for Q4.

Failing to make quarterly payments on time results in an underpayment penalty. The safe harbor rule states that you can avoid penalties by paying either 100% of your prior year tax liability or 90% of your current year tax liability, whichever is smaller.

How to Estimate Your Tax Bill

Our free US freelance tax calculator estimates your self-employment tax, federal income tax, state income tax, total tax burden, effective tax rate, and quarterly estimated payment — all in one place. Simply enter your annual freelance income, any business expenses, your filing status, and your state. The tool handles all the bracket calculations automatically.

Remember that this is an estimate only. Your actual tax liability depends on your specific deductions, credits, and circumstances. Always consult a licensed tax professional before making filing or payment decisions.

Frequently Asked Questions

What expenses can freelancers deduct?
Common deductible expenses include home office costs, equipment and software, professional subscriptions, business travel, health insurance premiums, and retirement contributions. Keep receipts for everything.

Do I need to pay self-employment tax if I earn less than $400?
No. If your net self-employment income is less than $400 for the year, you do not owe self-employment tax.

Can I deduct my health insurance as a freelancer?
Yes. Self-employed individuals can deduct 100% of health insurance premiums for themselves and their family from their gross income.

What is the best way to save for taxes as a freelancer?
Set aside 25% to 30% of every payment you receive into a separate savings account designated for taxes. This ensures you always have funds available for quarterly payments.

Estimate Your Freelance Tax Now

Use our free freelance tax calculator to estimate your 2025 tax bill and quarterly payments. No signup required.