BusCalcTools

Self-Employment Tax Calculator — TY 2026

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Estimate the full tax bill for a freelancer or sole proprietor — SE tax (Social Security + Medicare), federal income tax, state tax, plus the quarterly payment to send to the IRS.

Self-employment tax is fifteen point three percent applied to ninety-two point three five percent of net business profit. Plus federal income tax and state tax. Pay quarterly.

How it works

Self-employment tax replaces the FICA payroll tax that W-2 employees pay through withholding. The rate is 15.3% — 12.4% Social Security and 2.9% Medicare — applied to 92.35% of net SE earnings. The 92.35% adjustment exists because employees only pay half of FICA; the other half comes from the employer. Since the self-employed pay both halves, they get a deduction for the employer-equivalent share before the rate is applied.

On top of SE tax sits federal income tax, computed against the standard bracket system after standard deduction. Half of the SE tax is deductible from AGI for income-tax purposes — this is the most-missed deduction on first-year 1040 Schedule SE filings. Most freelancers underpay by 5-15% in year one because they forget this and the QBI deduction (not modelled in v1).

Common mistakes

  • Forgetting the half-SE-tax deduction — every $10,000 of SE income generates roughly $1,413 of SE tax, and half ($706) reduces your AGI for federal-income-tax purposes. Skipping this is the most common rookie 1040-ES error. The calculator includes it automatically.
  • Skipping QBI — Section 199A allows a 20% deduction on qualified business income for most non-specified-service trades, phased out above $241,950 / $483,900 (2026 estimates). This calculator does not model it because the phase-out logic is too involved for a v1; assume your effective rate could be 4-7 percentage points lower than shown if you qualify.
  • Not setting aside quarterly money — if you owe $1,000+ in tax beyond withholding, the IRS requires quarterly estimated payments. Missing them triggers underpayment penalties of about 8% annualised. Bank the quarterly figure shown by this calculator the moment each invoice is paid.
See the formula
SE Base       = Net SE Income × 92.35%
SE Tax        = SE Base × 15.3%  (SS capped at $184,500 in 2026)
                = SE Base × 12.4% (SS portion, up to wage base)
                + SE Base × 2.9%  (Medicare, no cap)

AGI           = SE Income + Other − ½ × SE Tax
Taxable       = AGI − Standard Deduction
Federal Tax   = Bracket-based on Taxable (10% → 37%)
State Tax     = Approximate effective rate by state tier
Total Tax     = SE Tax + Federal Tax + State Tax
Quarterly     = Total ÷ 4

Worked example

A single freelance graphic designer earns $80,000 net (gross revenue minus business expenses) in tax year 2026. No other income. Lives in Colorado (moderate state tax tier ~5%).

SE base = $80,000 × 92.35% = $73,880. SE tax = $73,880 × 15.3% = $11,303. Half SE tax ($5,651) reduces AGI. AGI = $80,000 − $5,651 = $74,349. Standard deduction = $15,000. Taxable income = $59,349. Federal tax at single brackets: 10% on first $11,925 ($1,193) + 12% on next $36,550 ($4,386) + 22% on remaining $10,874 ($2,392) = $7,971 federal. State tax = $80,000 × 5% = $4,000. Total tax = $11,303 + $7,971 + $4,000 = $23,274. Quarterly = $5,819.

Effective rate is 29.1%. The same freelancer in Texas (no state tax) would owe $19,274 total — about $4,000 less. The same freelancer in California (high tier, 9%) would owe $26,474 — about $3,200 more. State choice is one of the single biggest variables in self-employment tax planning, often larger than the federal differences between filing statuses.

When to use this calculator

Use this if you are a freelancer, sole proprietor, single-member LLC owner, or independent contractor with 1099 income. It produces the total tax exposure for the year and the four equal quarterly payments to send to the IRS so you stay under the safe-harbor threshold. Re-run it every time net income shifts meaningfully — gaining a major client, losing one, or moving to a new state.

If profit is climbing past roughly fifty thousand dollars a year and the SE tax line is getting painful, run the S-Corp Election Calculator to see whether switching tax structures will reduce the bill. To set the quarterly payment exactly to the safe-harbor minimum rather than full liability, use the Estimated Tax Calculator.

Frequently Asked Questions

How much is self-employment tax?
15.3% applied to 92.35% of net SE earnings (the 92.35% accounts for the employer-equivalent FICA deduction). For 2026, the 12.4% Social Security portion caps at $184,500 of SE base; Medicare's 2.9% continues without cap. Net rate works out to roughly 14.1% of net profit.
How do I calculate quarterly estimated tax?
Total tax (SE + federal income + state) divided by 4. The IRS expects four equal payments by April 15, June 15, September 15, and January 15 of the following year. If you owe $1,000+ beyond withholding, missing these triggers ~8% annualised underpayment penalty.
Can I deduct half of self-employment tax?
Yes. Half of the SE tax is deductible above the line — it reduces your AGI for federal income-tax purposes. This calculator includes the deduction automatically. Forgetting it overstates AGI and federal income tax by 5-8% for most freelancers.
Does self-employment tax replace W-2 payroll tax?
It replaces FICA — the 7.65% × 2 = 15.3% combined payroll tax that W-2 employees and employers pay jointly. Freelancers pay both halves themselves. The 92.35% adjustment in the SE tax formula reflects the half-deduction that brings the effective rate closer to what an employee pays (after considering the employer-side burden).
What is QBI and is it included here?
Section 199A allows a 20% deduction on qualified business income for most non-specified-service trades, phased out above $241,950 single / $483,900 MFJ (2026 estimates). This calculator does not model QBI because the phase-out logic and specified-service-business rules are too involved for a v1. Effective rates shown can be 4-7 percentage points high if you qualify.
Why is my state tax only 3 tiers?
Real state tax is bracket-based across 41 different state systems plus DC. The 3-tier approximation (none / 5% / 9%) is a pragmatic working estimate. Texas, Florida, Nevada, Washington and a few others have no state income tax; California, New York, Oregon, New Jersey, Minnesota are the high-tax outliers. Most states sit in the 4-6% effective band.
What is the most common SE tax mistake?
Forgetting the half-SE-tax deduction (worth 5-8% lower federal income tax). Second most common: missing the QBI deduction when eligible. Third: failing to bank the quarterly payment when invoices are paid — by Q3 most underprepared freelancers can not fund the back-payment without scrambling.
Should I set aside a percentage of every invoice?
Yes. The rough rule for moderate-state-tax freelancers: 25-30% of every payment goes to a separate tax-savings account. High-tax-state freelancers (CA, NY) should bank 32-37%. This way, when quarterly due dates arrive, the cash is already there — no scrambling to free up working capital.
How does an LLC affect SE tax?
A single-member LLC is disregarded for federal tax purposes — net profit flows to Schedule C and is fully subject to SE tax. A multi-member LLC files Form 1065 and partners pay SE tax on their distributive share (with some exceptions for limited partners). Forming an LLC does not reduce SE tax. The S-corp election does — see the S-Corp Election Calculator.
How does SE tax differ above the Social Security wage base?
The 12.4% Social Security portion stops at $184,500 of SE base (2026 estimate). Above that, only the 2.9% Medicare portion continues. Plus, single filers with combined wages + SE income above $200,000 ($250,000 MFJ) pay an Additional Medicare Tax of 0.9% — not modelled here. High-income SE arithmetic is materially different from mid-income.

Glossary

SE Tax
Self-employment tax — the 15.3 percent combined Social Security and Medicare contribution paid by self-employed people in place of FICA withholding.
SE Base
Net SE income multiplied by 92.35 percent. The figure SE tax is actually computed against, reflecting the employer-share deduction.
Half-SE Deduction
An above-the-line deduction equal to half of SE tax. Reduces AGI for federal income tax purposes and is the most-missed deduction in first-year filings.
QBI Deduction
Section 199A's twenty percent deduction on qualified business income for most non-specified-service trades. Phases out at higher income levels and is not modelled in this v1 calculator.

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Methodology & sources

Rates last verified: May 2026

Read the full methodology →

2026 IRS brackets and SS wage base used (post-TCJA-indexed estimates — confirm against Rev. Proc. annual update). QBI deduction (Section 199A) not modelled; additional Medicare tax (0.9% above $200k single / $250k MFJ) not modelled. State tier is a simplified 3-band approximation, not state-bracket-accurate.

Primary sources

Rates are reviewed annually or when a region changes its headline rate. If you spot one that's out of date, email [email protected].

For information only. This calculator does not constitute financial, accounting, or tax advice. Consult a qualified professional before making business decisions.

Try these scenarios

Pre-filled examples — click any chip to load the inputs and result.

How to calculate self-employment tax

  1. Enter your net SE incomeSchedule C net profit — gross business revenue minus deductible business expenses.
  2. Add other incomeW-2 wages, spouse income, investments — affects the federal bracket calculation.
  3. Pick filing status and state tierStandard deduction and brackets differ by status. State tier is a simplification of the 50-state matrix.
  4. Read the total tax and quarterly figureThe quarterly amount is what to send to the IRS each quarter to avoid underpayment penalty.

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Written by

James Blanckenberg

Founder, BusCalcTools

Founder of BusCalcTools and FinnCalc. Builds practical financial calculators for small business owners and freelancers across the US, UK, and South Africa.

Editorial review by: James Blanckenberg, Founder & Editor

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