Freelancers are responsible for paying their own taxes—including the 15.3% self-employment tax that employers normally cover half of. Understanding deductions and quarterly payments can save thousands.
Table of Contents
How Freelance Income Is Taxed
Self-Employment Tax (15.3%)
Component
Rate
Income Cap
Social Security
12.4%
First $168,600 of earnings
Medicare
2.9%
No cap
Additional Medicare
0.9%
Income over $200K (single) / $250K (married)
Total SE tax
15.3%
(12.4% capped + 2.9% uncapped)
W-2 employees only pay half (7.65%)—their employer pays the other half. Freelancers pay both halves.
Total Tax Rates for Freelancers
Net Freelance Income
SE Tax
Federal Income Tax*
Total Federal Tax
Effective Rate
$30,000
$4,239
$1,643
$5,882
19.6%
$50,000
$7,065
$4,133
$11,198
22.4%
$75,000
$10,598
$8,025
$18,623
24.8%
$100,000
$14,130
$12,615
$26,745
26.7%
$150,000
$20,389
$23,615
$43,004
28.7%
*After standard deduction, self-employment tax deduction, and QBI deduction. Single filer, no other income.
$23,500 + 25% of net SE income (up to $69,000 total)
Highest contributions possible
SIMPLE IRA
$16,500 + 3% match
Multi-person businesses
Traditional/Roth IRA
$7,000 ($8,000 if 50+)
Everyone (in addition to above)
Example: Solo 401(k) on $100,000 Net Income
Component
Amount
Employee contribution (elective deferral)
$23,500
Employer contribution (25% of net SE income*)
~$18,587
Total tax-deductible contribution
$42,087
Tax savings (24% bracket)
~$10,100
*Net SE income is reduced by half of SE tax for this calculation.
The Bottom Line
Freelancers typically owe 25-35% of net income in combined taxes. Reduce your bill by tracking all deductions (home office, health insurance, vehicle, software), contributing to a Solo 401(k) or SEP IRA, and paying quarterly estimates to avoid penalties. Set aside 30% of every payment you receive, and you’ll never be caught short at tax time.
