Professional services
Contractor Tax Calculator
Estimates tax for an independent contractor, where the classification itself is the first question.
Result
Not tax advice. Entity choice, reasonable compensation, pass-through deductions and state treatment interact in ways that depend entirely on your circumstances, and the rules change annually. This estimates a set-aside; the decision belongs with an accountant. The pass-through deduction has income thresholds and excludes several service businesses above them, so claiming the full 20% is frequently wrong. This also applies a flat marginal rate rather than progressive brackets, which overstates the tax.
Get a Free Business AuditHow the calculation works
The same mechanics as any self-employed income: net earnings after expenses carry self-employment tax covering Social Security and Medicare, with the Social Security portion capped at the annual wage base, plus income tax on taxable income with half the self-employment tax deductible. The result is a planning estimate rather than a filing figure.
What moves the number
- Net earnings after expenses, including mileage, tools and insurance.
- Whether the classification as contractor rather than employee is correct.
- Position against the Social Security wage base.
- State and local tax, which is not modelled here.
Where this one goes wrong
Whether someone is genuinely an independent contractor is a legal test rather than a label, and it depends on control over how the work is done rather than on what the agreement says. A worker treated as a contractor who meets the tests for employee status creates liability for the payer and a different tax position for the worker, and both the IRS and the Department of Labor apply their own tests. If the classification is in doubt, resolve that before worrying about the arithmetic, because the arithmetic changes with the answer.
Before you quote
- Confirm the contractor classification is defensible, not just agreed.
- Track deductible expenses through the year rather than reconstructing them.
- Confirm the current year's rates and wage base.
Where the rules come from
Questions
About this calculator
Does calling someone a contractor make them one?
No. It is a legal test turning largely on control over how the work is performed, and the agreement's wording does not settle it. The IRS and the Department of Labor each apply their own tests, and a misclassification creates liability for the payer.
What can a contractor deduct?
Ordinary and necessary business expenses, which for trades commonly means tools, materials, vehicle use, insurance and licensing. Tracking them as they occur rather than reconstructing at year end is what makes the deduction defensible, and the IRS publishes the rules on recordkeeping.
Is self-employment tax the same as income tax?
No, they are separate and both apply. Self-employment tax covers Social Security and Medicare on net earnings; income tax is on taxable income. Half the self-employment tax is deductible against income tax, which softens the total slightly.
The formula
net profit, then self-employment tax, then income tax on profit less half the SE tax, the standard deduction and any pass-through deduction
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How to use this calculator
- Business revenue ($). Enter your own figure; the page starts at $140,000.
- Deductible business expenses ($). Enter your own figure; the page starts at $34,000.
- Self-employment tax rate (%). Enter your own figure; the page starts at 15.3%.
- Federal marginal rate (%). Enter your own figure; the page starts at 22%.
- State rate (%). Enter your own figure; the page starts at 5%.
- Standard or itemised deduction ($). Enter your own figure; the page starts at $14,600.
The result updates as you type, so you can try a figure, see what it does to estimated total tax, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Business revenue | $140,000 |
| Deductible business expenses | $34,000 |
| Self-employment tax rate | 15.3% |
| Federal marginal rate | 22% |
| State rate | 5% |
| Standard or itemised deduction | $14,600 |
| Pass-through deduction claimed | 20% |
What comes out
| Result | Value |
|---|---|
| Estimated total tax main result | $31,909 |
| Net business profit | $106,000 |
| Self-employment tax | $14,977 |
| Income tax | $16,932 |
| Left after tax | $74,091 |
| Effective rate on profit | 30.10% |
On $106,000 of net profit the tax is about $31,909, made up of $14,977 self-employment tax and $16,932 income tax. That leaves $74,091, an effective rate of 30.10%.
How sensitive the answer is
Holding everything else steady and changing only business revenue, this is what happens to estimated total tax. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Business revenue ($) | Estimated total tax |
|---|---|
| $70,000 | $8,234 |
| $105,000 | $20,072 |
| $140,000 example above | $31,909 |
| $210,000 | $55,585 |
| $280,000 | $79,260 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Business revenue ($)
- A money amount, starting at $140,000.
- Deductible business expenses ($)
- A money amount, starting at $34,000.
- Self-employment tax rate (%)
- A percentage, between 0 and 20, starting at 15.3%.
- Federal marginal rate (%)
- A percentage, between 0 and 50, starting at 22%.
- State rate (%)
- A percentage, between 0 and 15, starting at 5%.
- Standard or itemised deduction ($)
- A money amount, starting at $14,600.
- Pass-through deduction claimed (%)
- Where it applies. Eligibility is restricted.
What the results tell you
| Result | What it is |
|---|---|
| Estimated total tax | The headline result. A money figure. |
| Net business profit | A money figure. |
| Self-employment tax | A money figure. |
| Income tax | A money figure. |
| Left after tax | A money figure. |
| Effective rate on profit | A percentage. |
Keep going
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