Self-Employment Taxes: A Freelancer's Guide

When you're self-employed, no employer withholds taxes or covers half of your payroll taxes. Understanding the extra burden — and planning for it — is what keeps a freelance business out of trouble at tax time.

The self-employment tax

Employees split Social Security and Medicare taxes with their employer. The self-employed pay both halves — 15.3% on most net earnings — on top of income tax. The good news: half of the self-employment tax is deductible against your income tax.

Plan for quarterly payments

• There's no automatic withholding, so the IRS expects estimated payments four times a year.
• A common rule of thumb is to set aside 25–30% of net income for taxes.
• Track deductible business expenses — they lower both income tax and self-employment tax.

Estimate your self-employment tax and retirement options with the calculators below.