Self-employment tax plus federal income tax comes to roughly $18,830 on an $80,000 profit — an effective rate near 23.5%. Budget for it or it will arrive as a bill.
How self-employment tax is calculated
Self-employment tax has two parts. Social Security is 12.4% of your net earnings, up to the annual wage base of $184,500 for 2026. Medicare is 2.9% of net earnings with no cap. Net earnings are your net profit minus half of the total self-employment tax, which is the standard deduction.
That half-deduction is the part people misread. You do not get 7.65% of your profit back as cash — you deduct it from your taxable income, so it reduces the income tax you owe. For an $80,000 profit, the self-employment tax is about $11,304, and the deduction is half of that.
This calculator applies the 2026 federal income tax brackets for a single filer with the $16,100 standard deduction, and does not include state taxes, the additional Medicare surtax, or the credits many freelancers qualify for. It is an estimate for planning, not a filed return.
How to use it
- Enter net profit, not gross revenue. Subtract your business expenses first — equipment, software, mileage, a home office, professional insurance. The tax applies to what you keep, not what you invoice.
- Read the effective rate as a planning number. For a sole proprietor with modest profit it typically lands between 25% and 32% of net profit. That is the number to set aside, not the 15.3% headline.
- Remember the quarterly schedule. This figure is a year-end liability; the IRS wants it paid in instalments through the year.
Where the effective rate comes from
The 15.3% figure people quote is only the self-employment tax. It is not what you owe. On $80,000 of net profit the self-employment tax is about $11,304, and the federal income tax on what remains after the half-deduction and the standard deduction adds roughly $7,527. Together that is a little under $18,830.
The rate climbs as profit climbs, because income tax is progressive while the self-employment tax is close to flat. At $30,000 of profit the effective rate is nearer 18%; at $150,000 it is close to 29%. That is why a single percentage is a bad planning number — the calculator recalculates it for your actual figure.
Two things are deliberately outside this estimate: state income tax, which varies from zero to over 10%, and the 0.9% additional Medicare tax that starts above the $200,000 threshold for a single filer. If either applies to you, treat the output as a floor rather than a final answer.
Frequently asked questions
Is 1099 income subject to self-employment tax?
Yes. A 1099 reports income paid to you as an independent contractor, and that income is self-employment income. W-2 employees split Social Security and Medicare with their employer; independent contractors pay both halves.
Can I deduct my home office and other expenses?
Yes, and they reduce your net profit, which is what this calculator uses. Common deductions include a home office, mileage, equipment, professional insurance, and part of your internet and phone. The simplified home office method lets you deduct a percentage of your home's square footage rather than itemizing everything.
Do I need to make quarterly payments?
Usually yes, if you expect to owe $1,000 or more in tax for the year. Use the quarterly tax calculator to work out the payments and avoid a large balance at filing time.