How Much Will You Owe in US Self-Employment Tax?
Calculate your complex Self-Employment Tax and see how much you can reduce your tax burden by applying various savings strategies.
Get Started NowTax Calculator & Simulator (2025 Basis)
This simulator is a tool to help you get an estimate of your tax burden as a self-employed individual. Always consult with a professional for actual tax filing.
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Simulation Results
Tax Burden Comparison by Scenario
Detailed Look at Key Tax Strategies
Discover the most effective ways to legally reduce your tax burden as a self-employed individual. Understanding how each strategy works will help you make smarter financial decisions.
Deduct Half of Your SE Tax
Deduct one-half of your self-employment tax (the 'employer' portion) from your income when calculating income tax. This is a powerful benefit that directly lowers your Adjusted Gross Income (AGI).
Deduct Business Expenses
Reduce your net profit by deducting all 'ordinary and necessary' costs of running your business, such as home office, vehicle expenses, supplies, and advertising. This is the first step in lowering both SE Tax and income tax.
Qualified Business Income (QBI) Deduction
This benefit allows you to deduct up to 20% of your Qualified Business Income (QBI). While conditions may vary based on your income level and industry, it offers significant savings for many self-employed individuals.
Advanced Strategies: Health & Retirement Planning
The biggest tax savings come from long-term financial planning. Health insurance premiums and retirement savings not only reduce your current taxes but also build a solid foundation for your future.
Self-Employed Health Insurance Deduction
You can deduct 100% of the health insurance premiums paid for yourself, your spouse, and dependents. However, you must meet certain conditions, such as not being eligible to participate in an employer-sponsored plan through a spouse.
Retirement Account Contribution Deduction
Contributions to retirement accounts like a SEP IRA or Solo 401(k) are fully tax-deductible. This is one of the most powerful ways to significantly lower your AGI, reduce income tax, and build your nest egg with tax-deferred growth.
SEP IRA vs. Solo 401(k) Comparison
| Feature | SEP IRA | Solo 401(k) |
|---|---|---|
| Contribution Structure | Employer contributions only | Employee + Employer contributions |
| Max Contribution (2025) | $70,000 (~20% of compensation) | $70,000 + $7,500 (catch-up if age 50+) |
| Roth Option | Not available | Available (for employee part) |
| Loan Option | Not available | Available (if plan allows) |
Core Self-Employment Tax Concepts
Before diving into tax strategies, it's crucial to understand exactly what self-employment tax is. Solidify your foundational knowledge with the topics below.
What is Self-Employment (SE) Tax?
SE tax is a tax consisting of Social Security (12.4%) and Medicare (2.9%) taxes, totaling 15.3%. It's the self-employed version of FICA taxes paid by W-2 employees. As a self-employed individual, you are considered both the employee and the employer, so you pay both portions.
Who has to pay it?
Anyone with net earnings of $400 or more from self-employment must pay SE tax. This includes sole proprietors, independent contractors, freelancers, and members of a partnership.
How is the tax calculated?
1. Gross Income - Business Expenses = Net Profit (Schedule C)
2. Net Profit × 92.35% = Taxable Earnings for SE Tax (An adjustment for parity with W-2 employees)
3. Taxable Earnings × 15.3% = Self-Employment Tax (Social Security tax applies only up to an annual income limit)
Compliance & Filing Guide
Just as important as saving on taxes is filing and paying them correctly and on time. Review the annual filing process and quarterly estimated tax deadlines.
Annual Tax Filing Process
Schedule C
Calculate Business Net Profit
Schedule SE
Calculate SE Tax Owed
Form 1040
Final Tax Return
Estimated Tax Payment Deadlines
- April 15: For income from Jan 1 - Mar 31
- June 15: For income from Apr 1 - May 31
- September 15: For income from Jun 1 - Aug 31
- January 15 (next year): For income from Sep 1 - Dec 31