Professional services
Freelance Tax Calculator
What a freelancer should set aside from each payment, and why the percentage is higher than expected.
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.
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About this calculator
Why is self-employment tax on top of income tax?
Because they are different taxes. Self-employment tax funds Social Security and Medicare, income tax is separate, and a self-employed person pays both halves of the former.
Does the pass-through deduction always apply?
No. It phases out above income thresholds for specified service businesses including law, accounting and health, which is exactly where many readers of this will be. Check eligibility rather than assuming.
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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Estimating is the easy part
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