How Much Tax Will You Owe?

One of the biggest financial surprises for new freelancers is how much they owe in taxes. Unlike salaried employees, freelancers don't have taxes withheld from each paycheck — you're responsible for paying federal income tax, state income tax, and self-employment tax on your own. This estimator helps you see what you'll likely owe so you can set aside the right amount throughout the year.

What taxes do freelancers pay?

Self-employment tax is 15.3% on your net self-employment income (up to the Social Security wage base, then 2.9% above that). This covers Social Security and Medicare — the portions normally split between employer and employee. As a freelancer, you pay both sides.

On top of that, you'll owe federal income tax at your marginal rate, and most states also charge income tax. The exact amount depends on your total income, your filing status, and what deductions you can claim. The estimator gives you a reasonable ballpark to work from.

The quarterly estimated tax system

The IRS expects freelancers to pay taxes four times a year rather than all at once in April. Missing or underpaying estimated taxes can result in a penalty, even if you pay in full by the filing deadline. The standard due dates are mid-April, mid-June, mid-September, and mid-January. Your state may have different dates.

A simple approach: set aside 25 to 30% of every payment you receive into a separate savings account designated for taxes. When quarterly payments are due, you'll have the money ready without scrambling.

Deductions freelancers commonly miss

The home office deduction, health insurance premiums, retirement contributions (SEP-IRA, Solo 401k), business software and subscriptions, professional development, a portion of your phone and internet costs, and business-related travel are all potentially deductible. Keeping clean records throughout the year — not just at tax time — makes it much easier to claim every deduction you're entitled to.