Self-Employment Tax Calculator
Estimate your 2026 quarterly tax obligations as a freelancer or small business owner. This tool calculates Social Security and Medicare taxes based on your projected annual gross income and business expenses, accounting for the 92.35% taxable income adjustment.
Tax Allocation (Social Security vs Medicare)
| Taxable SE Income (92.35% of Profit) | |
| Social Security Tax (12.4%) | |
| Medicare Tax (2.9%) | |
| Addl. Medicare Surcharge |
Self-Employment Tax Guide: Estimating Quarterly Payments for Freelancers
Transitioning from a traditional W-2 employee to a self-employed freelancer or small business owner is an exciting journey toward professional independence. However, with great freedom comes the responsibility of managing your own tax obligations. Unlike employees who have taxes withheld from every paycheck, freelancers are responsible for both the employer and employee portions of Social Security and Medicare taxes. This is commonly known as the Self-Employment (SE) Tax.
How to Use the Calculator
Our 2026 Self-Employment Tax Calculator is designed to simplify this complex process. To get an accurate estimate, follow these steps:
- Enter Gross Income: Input the total revenue your business expects to generate before any deductions.
- Deduct Expenses: Include all "ordinary and necessary" business costs—such as software subscriptions, office rent, equipment, and marketing fees.
- Select Filing Status: Your filing status affects the threshold for the Additional Medicare Surcharge.
The Calculation Formula Explained
The IRS requires self-employed individuals to pay a total of 15.3% on their net earnings. However, you don't pay tax on 100% of your profit. The calculation follows these specific steps:
- Net Profit: Gross Income - Business Expenses.
- Taxable SE Income: Only 92.35% of your net profit is subject to SE tax. This adjustment accounts for the fact that employers get to deduct half of their payroll taxes.
- Social Security (12.4%): Applied to the first $168,600 (projected for 2026) of your taxable SE income.
- Medicare (2.9%): Applied to all taxable SE income with no ceiling.
- Additional Medicare Surcharge (0.9%): If your income exceeds $200,000 (Single) or $250,000 (Married Jointly), you owe an extra 0.9% on the amount over the threshold.
Importance of Quarterly Estimated Payments
The U.S. tax system is a "pay-as-you-go" system. If you expect to owe $1,000 or more in taxes for the year, you are generally required to make quarterly estimated tax payments. Failure to do so can result in underpayment penalties from the IRS. These payments are due on April 15, June 15, September 15, and January 15 of the following year.
Related Tips for Freelancers
To optimize your tax situation, consider the following: * **Keep Meticulous Records:** Use accounting software to track every receipt. * **Separate Bank Accounts:** Never mix personal and business finances. * **Home Office Deduction:** If you use a portion of your home exclusively for work, you may be eligible for significant deductions. * **Consult a CPA:** While calculators provide estimates, a tax professional can identify specific credits tailored to your industry.
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