What does self-employment income actually pay out after US tax?
Enter income to see the real take-home, the quarterly set-aside, and any deductions that might not be claimed yet.
How quarterly taxes work for freelancers
If you earn money through freelancing, consulting, or contract work, you are responsible for paying taxes on that income. The IRS operates on a "pay-as-you-go" system, which means they expect you to make estimated tax payments four times per year rather than waiting until April.
Why quarterly payments exist
W-2 employees have taxes withheld from every paycheck automatically by their employer. As a freelancer, you are classified as self-employed under IRS guidelines, which means you handle both the employee and employer portions of payroll taxes yourself. The quarterly system ensures the government collects revenue throughout the year.
The three taxes you owe
Your quarterly tax payment covers three distinct obligations:
- Federal income tax: Based on your taxable income after the standard deduction and other deductions. The 2025 tax brackets range from 10% to 37% across seven rates. See IRS federal income tax rates for current brackets.
- Self-employment (SE) tax: 15.3% applied to 92.35% of your net self-employment income, which funds Social Security (12.4%) and Medicare (2.9%). Per IRS Publication 334, the 92.35% multiplier accounts for the employer-equivalent deduction. The Social Security portion caps at $176,100 for 2025.
- State income tax: Varies by state. Nine states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming) have no income tax. California tops out at 13.3%. Check your state's tax rates.
The $1,000 rule
According to IRS guidelines on estimated taxes, you must make quarterly payments if you expect to owe $1,000 or more in tax when you file your return. If you owe less, you can pay everything at tax time without penalty.
Penalty for underpayment
The IRS charges an underpayment penalty if you do not pay enough throughout the year. The penalty is calculated as interest on the amount you should have paid, from when it was due until when you actually paid. The current underpayment interest rate is 8% annually. Even if you pay everything by April 15, you will still owe the penalty for late quarterly payments.
2026 quarterly tax due dates
Quarterly taxes follow a staggered schedule that does not align perfectly with calendar quarters. The IRS sets specific deadlines each year. Mark these dates:
| Income earned | Payment due | IRS Form |
|---|---|---|
| January 1 – March 31 | April 15, 2026 | 1040-ES (Q1) |
| April 1 – May 31 | June 16, 2026 | 1040-ES (Q2) |
| June 1 – August 31 | September 15, 2026 | 1040-ES (Q3) |
| September 1 – December 31 | January 15, 2027 | 1040-ES (Q4) |
If a due date falls on a weekend or federal holiday, the deadline moves to the next business day. June 15, 2026 falls on a Sunday, so Q2 is due June 16.
How to make payments
The IRS accepts payments through several methods:
- IRS Direct Pay: Free, instant bank transfer. No registration required.
- EFTPS: Electronic Federal Tax Payment System. Requires registration but allows scheduled payments.
- Credit/debit card: Through IRS-approved processors. Processing fees apply (1.85-1.98% for credit cards).
- Mail: Send a check with Form 1040-ES voucher to the address for your state listed in the 1040-ES instructions.
For state taxes, check your state's department of revenue website. Most states offer free online payment options similar to IRS Direct Pay.
Self-employment tax formula explained
Self-employment tax is the self-employed person's equivalent of FICA taxes (Social Security and Medicare), which W-2 employees split with their employer. As a freelancer, you pay both halves.
The calculation
The formula prescribed by IRS Publication 334 is:
- Net self-employment income: Your gross business income minus business expenses
- Taxable SE income: Net income × 92.35% (this accounts for the employer-equivalent portion)
- SE tax: Taxable SE income × 15.3%
Example: If your net freelance income is $100,000:
- Taxable SE income: $100,000 × 0.9235 = $92,350
- SE tax: $92,350 × 0.153 = $14,129.55
The 15.3% breakdown
- Social Security: 12.4% on income up to $176,100 (2025 wage base limit, adjusted annually for inflation)
- Medicare: 2.9% on all income with no cap
- Additional Medicare: 0.9% on income over $200,000 (single) or $250,000 (married filing jointly)
The SE tax deduction
You can deduct 50% of your self-employment tax when calculating your adjusted gross income. This is taken on Schedule 1, not Schedule C. In the example above, you would deduct $7,064.78 from your taxable income, reducing your income tax liability.
Common deductions freelancers miss
Business expenses reduce your taxable income, which reduces both your income tax and self-employment tax. Many freelancers leave money on the table by not tracking deductions they qualify for. This calculator includes four deduction categories you can enter directly.
Mileage deduction
The IRS standard mileage rate for 2025 is $0.70 per mile for business use of a vehicle. Enter your business miles driven in the calculator and it computes your deduction automatically. You can also use the actual expense method (gas, insurance, depreciation), but standard mileage is simpler and often higher for fuel-efficient vehicles.
Health insurance premiums
If you are self-employed and pay for your own health insurance, you can deduct 100% of premiums for yourself, your spouse, and dependents. This is an above-the-line deduction (Schedule 1), not subject to the 7.5% AGI floor that applies to itemized medical deductions. The deduction is limited to your net self-employment profit.
Retirement contributions
Contributions to self-employed retirement plans reduce your taxable income significantly:
- SEP-IRA: Up to 25% of net self-employment earnings (after the SE deduction), max $70,000 for 2025
- Solo 401(k): Up to $23,500 employee contribution (2025) + 25% employer contribution, max $70,000 total
- Traditional IRA: Up to $7,000 ($8,000 if 50+)
QBI deduction (Section 199A)
The QBI deduction lets most sole proprietors deduct 20% of their net business income from federal taxable income. This calculator applies it by default for income under $191,950 (single) or $383,900 (MFJ). You can disable it in the 'Add deductions' section if uncertain about eligibility.
Business expenses (Schedule C)
Common deductible expenses include software and subscriptions, equipment, professional services, education directly related to your field, home office, and business insurance. Items over $2,500 may need to be depreciated unless you elect Section 179. See IRS home office deduction guidelines for the home office calculation.