How the self-employment tax calculation works
Self-employment (SE) tax is how freelancers, contractors and sole proprietors pay Social Security and Medicare. Employees split these taxes with an employer. When you work for yourself, you pay both halves, which is why the combined rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare.
The rate is not applied to your full profit. It is applied to 92.35% of your net earnings, which approximates the employer-equivalent adjustment. The Social Security part stops once your combined wages and self-employment earnings reach the 2026 wage base of $184,500. The Medicare part has no cap, and an extra 0.9% Additional Medicare Tax applies to earnings above $200,000 (single) or $250,000 (married filing jointly), reduced by any W-2 wages you also have.
You can deduct half of your SE tax (the Social Security and Medicare portions) when you calculate adjusted gross income. This calculator applies that deduction, then subtracts the 2026 standard deduction and applies the 2026 federal brackets to estimate income tax.
Worked example
Say your net profit is $100,000 and you file as single with no other income. 92.35% of $100,000 is $92,350. Social Security is 12.4% of that ($11,451) and Medicare is 2.9% ($2,678), so SE tax is about $14,130. Half of that, about $7,065, is deductible. Your estimated taxable income is roughly $76,835 after the $16,100 standard deduction, and federal income tax comes to about $11,616. Total federal tax is near $25,745, or about 26% of profit.
What this estimate leaves out
The calculator is a planning tool. It does not model state tax, itemized deductions, tax credits, the Net Investment Income Tax, or the income limits that restrict the Qualified Business Income (QBI) deduction at higher incomes. The optional QBI setting simply applies 20% of net profit after the SE deduction, capped by taxable income, so use it only if you expect to qualify. Married filers who file separately are not modeled.
If you are an employee as well as a freelancer, enter your W-2 wages. They use up part of the Social Security wage base and can bring the Additional Medicare Tax into play sooner.
Ways to lower the bill
Common legitimate levers include deducting ordinary business expenses, contributing to a SEP IRA or Solo 401(k), paying self-employed health insurance premiums, and claiming the home office deduction if you qualify. Try the deduction estimator and the Solo 401(k) calculator on this site to see the effect.
How much should you set aside from each 1099 payment?
For a single filer with no other income, the 2026 federal total (self-employment tax plus income tax) comes to roughly 18% of profit at $30,000, 21% at $50,000, 24% at $80,000, 27% at $120,000 and 31% at $200,000. These figures use the standard deduction and no QBI deduction, and they exclude state tax.
A common rule of thumb is to set aside 25% to 30% of every payment, then adjust once you know your real numbers. Add your state rate if your state has an income tax, and keep the money in a separate savings account so it is there when quarterly payments are due.