Self-Employed Taxes Made Simple
How self-employment tax works, why you set money aside from every payment, and how to estimate your yearly bill.
When you work for yourself nobody withholds tax from your payments. You are responsible for income tax and for both halves of the payroll taxes.
The self-employment tax
In the US, self-employment tax covers Social Security and Medicare. The Social Security part (6.2% each for employer and employee, so 12.4% in total) applies up to $176,100 of earnings in 2025. Medicare adds 2.9% on all earnings.
Set money aside
A common habit is to move 25% to 30% of every payment into a separate savings account for tax. Adjust it once you know your real number.
Price your work to cover it
An employee's hourly rate is not what a freelancer needs. Add tax, unpaid time, holidays and costs. The freelance rate calculator does this.
Estimate your bill
Run your profit through the self-employment tax calculator, then add income tax with the income tax calculator. Many countries expect quarterly payments, so check your tax authority's dates.
This article is general education, not financial advice.