How to use this self-employment tax calculator
Enter your expected net profit for 2026: business income minus deductible business expenses, which is line 31 of Schedule C. If you also have a job, add your W-2 wages so the calculator can apply the Social Security wage base correctly. Add other taxable income (interest, a spouse's wages on a joint return) so the income tax estimate lands in the right bracket. Choose your filing status, and optionally tick the QBI box.
The results show the two layers of federal tax a sole proprietor, freelancer, or single-member LLC owner pays: self-employment tax on Schedule SE, then ordinary income tax on Form 1040. The quarterly figure is simply the total divided by four.
What self-employment tax is
Employees split Social Security and Medicare taxes with their employer: 7.65% is withheld from each paycheck and the employer pays another 7.65%. When you work for yourself you are both parties, so you pay the full 15.3% yourself. That combined amount is self-employment (SE) tax, and it exists only to fund Social Security and Medicare. It is entirely separate from income tax, which you owe on top.
The 15.3% has two parts, each with different rules for 2026:
| Component | Rate | Applies to |
|---|---|---|
| Social Security (OASDI) | 12.4% | First $184,500 of combined W-2 wages and net SE earnings |
| Medicare | 2.9% | All net earnings, no cap |
| Additional Medicare Tax | 0.9% | Wages + net earnings above $200,000 (single/HoH), $250,000 (joint), $125,000 (separate) |
The $184,500 wage base comes from the Social Security Administration's 2026 announcement (up from $176,100 in 2025). The 0.9% Additional Medicare Tax is technically reported on Form 8959 rather than Schedule SE, but you owe it in the same estimated payments, so it is included in the total here.
You owe SE tax only if your net earnings from self-employment are $400 or more for the year.
The formula, step by step
SE tax is not simply 15.3% of your profit. There are two adjustments that work in your favour.
Step 1: Net earnings = Net profit × 92.35%. Employees are not taxed on the employer's 7.65% share of FICA, so the IRS lets you exclude the equivalent 7.65% from your profit before applying the rate. 100% − 7.65% = 92.35%.
Step 2: SE tax = Net earnings × 15.3% (12.4% up to the wage base, 2.9% on everything).
Step 3: Deduct half. One-half of your SE tax, the "employer" share, is deductible on Schedule 1 when computing adjusted gross income. It reduces your income tax, not your SE tax.
Step 4: Income tax is then calculated on AGI minus the standard deduction (or itemised deductions) using the 2026 brackets.
Worked example: $80,000 net profit, single filer, 2026
| Line | Calculation | Amount |
|---|---|---|
| Schedule C net profit | $80,000.00 | |
| Net earnings from SE | $80,000 × 92.35% | $73,880.00 |
| Social Security | $73,880 × 12.4% | $9,161.12 |
| Medicare | $73,880 × 2.9% | $2,142.52 |
| Self-employment tax | $11,303.64 | |
| Deduction for ½ SE tax | $11,303.64 ÷ 2 | −$5,651.82 |
| Adjusted gross income | $80,000 − $5,651.82 | $74,348.18 |
| Standard deduction (single, 2026) | −$16,100.00 | |
| Taxable income | $58,248.18 | |
| Federal income tax | $5,800 + 22% × ($58,248.18 − $50,400) | $7,526.60 |
| Total federal tax | $11,303.64 + $7,526.60 | $18,830.24 |
| Quarterly estimated payment | ÷ 4 | $4,707.56 |
The effective federal rate on $80,000 of profit is 23.5%, and the SE tax alone is about 14.1% of profit, which is why the 92.35% factor matters: without it the SE tax would be $12,240.
Ticking the QBI box in the calculator lowers the income tax in this example to $5,343.82 and the total to $16,647.46. The qualified business income deduction lets most sole proprietors deduct 20% of business income (capped at 20% of taxable income) before applying the brackets. The One Big Beautiful Bill Act made it permanent from 2026 and added a $400 minimum deduction for owners with at least $1,000 of qualified business income from a business they actively run; the calculator applies that minimum too. The calculator applies the simple version only; if your taxable income exceeds $201,750 (single) or $403,500 (joint), wage and property tests and a phase-out for professional service businesses can shrink or eliminate it, and the tool flags that case rather than guessing.
Why the half-SE deduction matters
Half of $11,303.64 is $5,651.82. In the 22% bracket that deduction saves $1,243 of income tax. It is an "above the line" deduction, so you get it whether or not you itemise, and it also lowers your AGI, which can help you qualify for other AGI-tested breaks such as the IRA deduction or the premium tax credit. What it does not do is reduce the SE tax itself, so do not subtract it before the Schedule SE calculation.
Quarterly estimated taxes and 2026 due dates
Nobody withholds tax from your invoices, so the IRS expects you to pay as you go. You generally must make estimated payments if you expect to owe $1,000 or more for the year after subtracting any withholding and credits. Miss or underpay them and you owe an underpayment penalty, which is effectively interest at the federal short-term rate plus 3 percentage points.
| Payment | Income earned | Due date (Form 1040-ES, 2026) |
|---|---|---|
| 1st | Jan 1 – Mar 31, 2026 | April 15, 2026 |
| 2nd | Apr 1 – May 31, 2026 | June 15, 2026 |
| 3rd | Jun 1 – Aug 31, 2026 | September 15, 2026 |
| 4th | Sep 1 – Dec 31, 2026 | January 15, 2027 |
The "quarters" are two, three, and four months long, so if your income is seasonal the ÷4 figure will overpay early and underpay late. Two ways to avoid penalties regardless of timing:
- Safe harbour. Pay at least 100% of last year's total tax (110% if your prior-year AGI exceeded $150,000) in four equal instalments, and you owe no penalty even if this year's income jumps.
- Annualised method. File Form 2210 Schedule AI to compute each quarter's payment from income actually earned so far. More work, but it fits businesses with lumpy revenue.
If you have a W-2 job as well, the simplest fix is often to raise withholding there on a new W-4 so it covers the tax on your side income. The payroll calculator shows what a given withholding amount does to each paycheck.
How an S-corp election changes the math
SE tax hits every dollar of sole-proprietor profit up to the wage base. An S corporation splits the owner's take into two streams: a reasonable salary, which is subject to the usual 15.3% FICA (half paid by the corporation, half by you), and distributions of the remaining profit, which are not subject to FICA or SE tax at all.
Take the $80,000 example. As an S-corp paying yourself a $50,000 salary, FICA is $50,000 × 15.3% = $7,650 versus $11,303.64 as a sole proprietor, a saving of about $3,650 a year. Against that you add payroll service fees, a separate corporate return (Form 1120-S), state franchise or minimum taxes, and possibly a lower QBI deduction because the salary itself is not qualified business income. Those costs commonly total $1,500–$3,000, so the election starts to make sense somewhere around $80,000–$100,000 of consistent profit, and it makes little sense below $50,000. "Reasonable" salary is the IRS's most-litigated S-corp issue; paying yourself $20,000 on $150,000 of profit invites a reclassification.
Reduce the base first: deductible expenses
Every dollar of legitimate business expense saves you both SE tax (about 14.1 cents) and income tax (12–24 cents for most owners), so a $1,000 expense you forgot to record costs $260–$380 in extra tax. Commonly missed sole-proprietor deductions include:
- Home office (simplified $5 per square foot up to 300 sq ft, or actual costs)
- Business use of your vehicle at the standard mileage rate
- Health insurance premiums for you and your family (deducted on Schedule 1, not Schedule C, but still reduces AGI)
- Retirement contributions to a SEP-IRA or solo 401(k)
- Software subscriptions, professional fees, licences, continuing education
- Half of business meals, phone and internet in proportion to business use
Track them as you go rather than reconstructing them in April. A simple expense tracker and a monthly profit and loss statement give you the net profit figure this calculator needs, and a running estimate of what to set aside each month, which for most freelancers is 25–30% of profit.
When to hand this to an accountant
This calculator is a planning tool, not a tax return. It ignores state income tax, itemised deductions, credits, the self-employed health insurance deduction, retirement contributions, and the QBI limits above the threshold. It is a good fit for a freelancer with one Schedule C business and straightforward income. Get professional help when:
- Net profit is consistently above about $80,000 and you have not evaluated an S-corp
- You have employees, or pay contractors $2,000 or more a year (the 2026 Form 1099-NEC filing threshold, up from $600)
- You sell in multiple states or online marketplaces with sales tax exposure
- You had a large one-off gain or loss, or you are behind on estimated payments
- You want a retirement plan more sophisticated than a SEP-IRA
Good bookkeeping software makes the accountant cheaper because they spend their time on advice rather than data entry. Our review of the best accounting software for small business compares the options for sole proprietors and small LLCs.