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About This Calculator
Estimate the self-employment tax you owe on freelance, contract, or business income, covering both the employer and employee portions of Social Security and Medicare. Unlike traditional employees who split these taxes with their employer, self-employed individuals pay the full 15.3% on net earnings. This calculator also shows the deductible portion that reduces your adjusted gross income.
Quick Tips
- 1 Deduct the employer-equivalent portion of self-employment tax on your income tax return.
- 2 Pay quarterly estimated taxes to avoid underpayment penalties in April.
- 3 An S-Corp election can reduce self-employment tax if your income exceeds $50K.
Example Calculation
A freelance designer earns $95,000 net with $8,000 deductible expenses.
Net earnings: $87,000 | SE tax base (92.35%): $80,345 | Self-employment tax: $12,293 | Effective SE rate: 14.1%
Self-Employment Tax Calculator — Kentucky Key Facts
Self-Employment Tax Calculator in Kentucky
Kentucky has a state income tax rate of 4%. The state sales tax rate is 6%. The median household income in Kentucky is $55,573.
Self-Employment Tax Calculator in Other States
How Self-Employment Tax Works
Self-employment tax is the way freelancers, independent contractors, and sole proprietors pay into Social Security and Medicare. Unlike traditional employees who split FICA taxes with their employer, self-employed individuals pay both the employee and employer portions, totaling 15.3%. The tax is calculated on 92.35% of your net self-employment earnings (revenue minus business expenses), and it applies to anyone who earns $400 or more in net self-employment income per year.
Social Security and Medicare for the Self-Employed
The 15.3% self-employment tax rate breaks down into 12.4% for Social Security and 2.9% for Medicare. The Social Security portion applies only up to the annual wage base limit ($168,600 in 2024), while the Medicare portion has no cap. Self-employed individuals earning more than $200,000 (single) or $250,000 (married filing jointly) also owe an additional 0.9% Medicare surtax on earnings above those thresholds, bringing the Medicare portion to 3.8%.
Deducting Half of Self-Employment Tax
The IRS allows self-employed individuals to deduct the employer-equivalent portion of their self-employment tax (7.65%) as an adjustment to gross income on Form 1040. This deduction is taken on your personal tax return, not on your Schedule C, and it reduces your adjusted gross income (AGI). This above-the-line deduction is available regardless of whether you itemize deductions, and it helps offset the higher tax burden that comes with paying both sides of FICA.
Quarterly Estimated Tax Payments
Self-employed individuals who expect to owe $1,000 or more in taxes are required to make quarterly estimated tax payments to the IRS. These payments are due on April 15, June 15, September 15, and January 15 of the following year. Each payment should cover approximately one-quarter of your expected annual income tax and self-employment tax liability. Failing to make adequate quarterly payments can result in underpayment penalties, even if you pay the full amount owed when filing your return.
Frequently Asked Questions
The self-employment tax rate is 15.3%, consisting of 12.4% for Social Security (up to $168,600 in 2024) and 2.9% for Medicare. This is calculated on 92.35% of your net self-employment income. You can deduct half of the SE tax from your adjusted gross income.
Employees split FICA taxes with their employer (each pays 7.65%). Self-employed individuals pay both the employee and employer portions (15.3%). However, you can deduct the employer-equivalent portion (7.65%) from your adjusted gross income.
Yes. If you expect to owe $1,000 or more in taxes, the IRS requires quarterly estimated payments (due April 15, June 15, September 15, and January 15). Missing these deadlines can result in underpayment penalties.
Self-employed individuals earning over $200,000 (single) or $250,000 (married filing jointly) owe an additional 0.9% Medicare tax on income above those thresholds. This brings the Medicare portion to 3.8% on high earnings.