Self-employment tax is 15.3% on top of income tax, because you pay both halves of Social Security and Medicare. This shows the total and what to set aside quarterly.
| Net profit | — |
| Net earnings92.35% of profit — the SE tax base | — |
| Social Security12.4%, both halves | — |
| Medicare2.9%, both halves | — |
| Federal income tax | — |
| State income tax | — |
An employee pays 6.2% Social Security and 1.45% Medicare, and their employer quietly matches both. When you work for yourself you are both parties, so you pay 12.4% and 2.9% — 15.3% in total.
This is the single biggest financial shock for people leaving employment. It is not a penalty and it does not replace income tax; it sits on top of it. A freelancer clearing $80,000 owes self-employment tax and federal income tax and state income tax on the same money.
Two provisions soften it. The tax applies to 92.35% of your net profit rather than all of it, which roughly approximates the employer-side deduction an employee's employer would take. And half of the self-employment tax is deductible against your income tax as an above-the-line adjustment, so it reduces your taxable income whether or not you itemise.
The 12.4% Social Security portion only applies to net earnings up to the annual wage base — $184,500 for 2026. Above that, only the 2.9% Medicare portion continues, with no ceiling, plus an additional 0.9% on earnings above $200,000 for a single filer.
If you also have W-2 wages, those consume the cap first. Someone earning $160,000 in salary and $60,000 from a side business pays the 12.4% only on the remaining $24,500 of the cap, not on all $60,000. Missing this is a common and expensive error on a self-prepared Schedule SE.
The calculator asks for W-2 wages for exactly this reason.
Nobody withholds tax from a client payment, so the IRS expects you to pay as you go. Estimated payments are due in April, June, September and January, and underpaying triggers a penalty even if you settle the full amount at filing.
The safe harbour is the thing to know: if you pay at least 100% of last year's total tax — 110% if your adjusted gross income exceeded $150,000 — you avoid the underpayment penalty regardless of what this year turns out to be. For anyone with volatile income that is a far easier target than forecasting the current year.
The quarterly figure shown here divides your projected annual liability by four. If your income is seasonal, the annualised income installment method lets you pay in proportion to when you actually earned rather than in equal quarters.
The qualified business income deduction, made permanent by the One Big Beautiful Bill Act, allows many pass-through owners to deduct up to 20% of qualified business income. It is subject to income thresholds, service-business limitations and wage tests that depend on facts this calculator does not collect, so it is not modelled. If you qualify, your actual tax will be lower than shown.
Also excluded: the deduction for self-employed health insurance premiums, retirement contributions through a SEP-IRA or solo 401(k), and the home office deduction. All three reduce what you owe. Treat the figure here as a conservative ceiling.
A common rule of thumb is 25% to 30% of net profit, but it depends heavily on your state and income. The quarterly figure on this page is calculated from your actual numbers rather than a rule of thumb.
Yes, both, on the same profit. Self-employment tax covers Social Security and Medicare; income tax is separate and additional.
Your W-2 wages use up the Social Security cap first, so the 12.4% portion applies only to whatever remains of the $184,500 base. Enter your wages above and the calculation accounts for it.
April, June, September and January. Paying at least 100% of last year's total tax — 110% above $150,000 of AGI — protects you from the underpayment penalty regardless of how this year turns out.