How self-employment tax is calculated
As a 1099 freelancer you pay both the employee and employer share of Social Security and Medicare. This calculator follows the IRS method:
- Net earnings = profit × 92.35%.
- Social Security = 12.4% of net earnings up to the 2026 wage base of $184,500.
- Medicare = 2.9% of all net earnings, plus 0.9% above $200,000.
- Federal income tax is charged on profit minus half of the SE tax, the $16,100 standard deduction and the 20% qualified business income (QBI) deduction.
Worked example
A freelancer with $90,000 of revenue and $8,000 of business expenses has a profit of $82,000 and assumes a 4% state income tax rate.
| Tax | Amount |
|---|---|
| Federal income tax | $5,522 |
| Self-employment tax (Social Security + Medicare) | $11,586 |
| State income tax | $3,048 |
| Total | $20,157 |
That is an effective rate of 24.6% of profit, leaving $61,843 to take home. Each extra $100 of profit costs about $27 in tax at this level, so setting aside around 25% of every payment is a safe habit.
2026 federal income tax brackets (single)
| Taxable income | Rate |
|---|---|
| Up to $12,400 | 10% |
| $12,401 – $50,400 | 12% |
| $50,401 – $105,700 | 22% |
| $105,701 – $201,775 | 24% |
| $201,776 – $256,225 | 32% |
| $256,226 – $640,600 | 35% |
| Over $640,600 | 37% |
What this estimate leaves out
It assumes a single filer with no other income. Married filing jointly, W-2 income from a job, retirement contributions (a SEP-IRA or Solo 401(k) can cut your bill significantly), health insurance deductions and tax credits all change the result. The QBI deduction is simplified: for some professions it phases out above about $200,000 of taxable income. State tax is a flat estimate — enter 0 if your state has no income tax.