How Freelancer Taxes Work
When you work as a freelancer or independent contractor, you receive 1099 income instead of a W-2. This changes how you pay taxes significantly. No employer is withholding anything from your checks, so you are responsible for sending money to the IRS yourself - four times per year.
There are two main components to your federal tax bill as a freelancer:
1. Self-Employment Tax (15.3%)
This is the big one most new freelancers miss. When you work for a company, your employer pays half of your Social Security and Medicare taxes. As a freelancer, you pay both halves. That is 12.4% for Social Security and 2.9% for Medicare, adding up to 15.3% of your net self-employment income.
The good news: you can deduct 50% of your self-employment tax from your gross income before calculating income tax, which reduces your overall burden somewhat.
2. Federal Income Tax
On top of self-employment tax, you owe regular federal income tax on your net profit (income minus business expenses). This is calculated using the standard 2026 tax brackets, and you get to subtract the standard deduction first - $14,600 for single filers, $29,200 for married filing jointly.
Quarterly Estimated Tax Payments
If you expect to owe $1,000 or more in taxes for the year, the IRS requires you to make quarterly estimated payments. The 2026 due dates are April 15, June 15, September 15, and January 15, 2027. Missing these payments can result in an underpayment penalty even if you pay everything by April 15.
Use the quarterly payment figure from this calculator as a guide. Set aside that amount in a separate savings account every quarter so you are never caught short.
Business Deductions That Lower Your Bill
- Home office (exclusive use test applies)
- Software and subscriptions used for work
- Equipment: computer, desk, monitor, phone (business portion)
- Professional development and courses
- Health insurance premiums (if self-employed)
- Business mileage at the IRS standard rate
- Professional services: accountant, lawyer fees
- Marketing and advertising costs
This calculator gives you a solid estimate for planning purposes. For your actual tax return, working with a CPA who specializes in self-employed clients is worth every dollar, especially once you start earning over $50,000 per year.