Self-Employment Tax Calculator
Discover exactly how much FICA tax (Social Security & Medicare) you owe the IRS as an independent contractor or sole proprietor. Avoid end-of-year audit surprises.
Total revenue collected this year
Equipment, travel, web hosting, etc.
How The IRS Taxes Freelancers
Starting your own business is incredibly rewarding, but the shock of a 'Schedule SE' tax bill during your first April filing can be devastating. When you transition from a W-2 employee to a 1099 contractor, you instantly lose the corporate tax shield that secretly paid for half of your Social Security burden.
The 15.3% Penalty
Normal corporate employees pay 7.65% out of their paychecks to fund FICA (Federal Insurance Contributions Act), and their employer matches the other 7.65% behind closed doors. Because the IRS views self-employed individuals as both the employee and the employer, you are legally forced to pay both halves: a brutal 15.3% tax.
- 12.4% goes directly to Social Security (capped when earnings exceed $168,600).
- 2.9% goes directly to Medicare (uncapped, with high-earner penalties).
The Two IRS Silver Linings
To prevent complete small business collapse, the IRS built two distinct 'breaks' directly into Schedule SE:
Break 1: The 92.35% Multiplier
You do NOT pay 15.3% tax on every dollar of profit you make. The IRS assumes you would have deducted your 'employer half' of the tax as a business expense anyway. To skip that tedious paperwork, they simply tax you on 92.35% of your net profit instead of 100%.
Break 2: The Adjustable Gross Income (AGI) Write-Off
When you finally move from Schedule SE to your main Form 1040 to pay standard Federal Income Tax, the IRS allows you to write off exactly 50% of the massive FICA check you just wrote as an 'above-the-line' deduction, lowering your final progressive income tax bracket.
Frequently Asked Questions
Running a Freelance Squad or Agency?
Share this tax estimator with your 1099 contractors so they know exactly how much of their check to hold back for the IRS every quarter.
Suggested hashtags: #Freelance #Taxes #SmallBusiness #Entrepreneur #thecalcs