How self-employment tax works
Employees pay 6.2% for Social Security and 1.45% for Medicare, and their employer pays the same again. When you work for yourself you pay both halves: 15.3% in total.
The 92.35% factor gives you the same break employees get on the employer half. Social Security applies only up to $184,500 of combined wages and self-employment income in 2026. You can then deduct half of your self-employment tax when you figure income tax.
Quarterly estimated taxes
No employer is withholding for you, so the IRS expects payments four times a year. For 2026 income, the usual due dates are April 15, June 15, and September 15, 2026, and January 15, 2027. Paying at least 100% of last year's total tax (110% if your income was over $150,000) generally avoids an underpayment penalty.
Frequently asked questions
How much should I set aside from each payment?
Many freelancers set aside 25% to 30% of their profit. The calculator shows a rate based on your own numbers in the 'Set aside' line.
Do I pay self-employment tax on small amounts?
If your net self-employment earnings are under $400 for the year, you don't owe self-employment tax, although the income still counts for income tax.
What is the QBI deduction?
The qualified business income deduction lets many self-employed people deduct up to 20% of their business profit. Above certain income limits it can shrink, especially for service businesses, so the estimate may be too generous at high incomes.