Self-employment tax: what freelancers and gig workers actually owe
Set aside more than you think — and pay quarterly to avoid penalties.
6 min read · Updated 2026-07-04
Self-employment tax on top of income tax
If you're self-employed, you pay 15.3% self-employment tax (Social Security + Medicare) on top of federal and state income tax. That is because you're paying both the employee and employer share of payroll taxes. Half of it is deductible above the line, softening the blow slightly.
Quarterly estimated payments
The IRS wants tax paid as income is earned. Freelancers and small business owners typically owe estimated taxes four times a year (April 15, June 15, Sept 15, Jan 15). Missing them triggers underpayment penalties even if you pay in full at tax time.
What to set aside
A safe default: 25–30% of every dollar of net self-employment income into a separate savings account for taxes. Higher earners in high-tax states should aim closer to 35%. Deductible business expenses (home office, mileage, software, health insurance premiums) reduce that base.
Key takeaways
- SE tax is 15.3% on top of income tax.
- Estimated taxes are quarterly — plan for them or pay penalties.
- Set aside 25–30% of net self-employment income by default.
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Educational content only. Not individualized financial, tax, or legal advice.