Self-Employment Tax Guide for Freelancers
If you're freelancing in the US, self-employment (SE) tax is likely your single largest tax obligation. It's the equivalent of the Social Security and Medicare taxes that employers normally split with their employees — but as a freelancer, you pay both halves.
What is self-employment tax?
SE tax is 15.3% of your net self-employment income:
- 12.4% for Social Security (capped at $168,600 in 2024)
- 2.9% for Medicare (no cap — plus 0.9% additional Medicare tax on earnings over $200K)
Who pays it?
Anyone with net self-employment income of $400 or more must pay SE tax. This includes freelance, gig, consulting, and business income. If you receive a 1099-NEC, you likely owe SE tax on that income.
How to calculate it
Use our Self-Employment Tax Estimator for an exact calculation. The basic formula:
- Start with net self-employment income
- Multiply by 92.35% (this is the taxable base)
- Apply 15.3% SE tax rate (12.4% SS + 2.9% Medicare)
- Deduct 50% of SE tax from your AGI for income tax purposes
Ways to reduce SE tax
- Business deductions: Software, hardware, office, travel — every legitimate expense reduces net income
- Retirement contributions: SEP-IRA, Solo 401(k) reduce taxable income
- Health insurance deduction: Self-employed health insurance is deductible
- Half-of-SE deduction: Automatically reduces your income tax (not SE tax)
Quarterly payments
You must pay estimated taxes quarterly to avoid penalties. Use our Quarterly Tax Calculator to estimate each payment.