Self-employment tax calculator

How the calculation works

The IRS requires self-employed filers to prepay income tax and self-employment tax in four quarterly installments. You avoid underpayment penalties if you pay at least as much as the safe-harbor amount — the lesser of:

1. 90% of this year's estimated tax. Calculated from your expected net profit after the SE tax deduction and standard deduction.
2. 100% (or 110%) of last year's tax liability. If your prior-year adjusted gross income exceeded $150,000, the threshold rises to 110%. This path lets you base payments on a known number even when this year's income is uncertain.

Self-employment tax is 15.3% on 92.35% of net profit — the combined employer-and-employee shares of Social Security (12.4%, capped at the $184,500 2026 wage base) and Medicare (2.9%). An Additional Medicare Tax of 0.9% applies above $200,000 for single filers ($250,000 MFJ). Half of SE tax is deductible from gross income, reducing the federal income tax base.

The calculator uses 2026 federal brackets from IRS Rev. Proc. 2025-32 and the 2026 standard deduction ($16,100 single / $32,200 MFJ / $24,150 HOH). State income tax is modeled for nine no-income-tax states and six flat-rate states; all others show federal-only results with a notice.

2026 IRS due dates: Q1 April 15 · Q2 June 15 · Q3 September 15 · Q4 January 15 (2027). Dates shift to the next business day when they fall on a weekend or federal holiday — verify on IRS.gov before paying.

Worked example

A single filer in Texas expecting $100,000 in net profit for 2026 with no prior-year tax liability (first year self-employed):

If this filer has paid nothing by Q2, the calculator flags underpayment penalty risk and shows the catch-up amount (two quarters) due on June 15.

Second example: using last year's tax as the safe harbor

Same filer, but they had a $20,000 tax liability last year (AGI under $150,000). The prior-year safe harbor is $20,000 × 100% = $20,000 — less than the 90% current-year estimate of $23,171. They can pay just $5,000/quarter and be protected from penalties even if their income turns out higher.

Assumptions and limitations

• Due dates are the standard calendar. Weekends and federal holidays shift the deadline to the next business day — confirm the exact date on IRS.gov before paying.
• State estimated-tax rules (their own safe-harbor percentages and separate due dates) are not modeled. This shows federal-only amounts when state tax is included.
• The annualized-income installment method (useful when income is uneven across the year) is not implemented. If your income is heavily weighted to one quarter, this method can reduce early-quarter payments.
• The QBI deduction, self-employed health insurance deduction, and retirement plan contributions other than the flat retirement-percentage input are not modeled.
• Head-of-household bracket thresholds below the 24% band are estimated from 2025 values — not yet directly verified against the final IRS table for 2026. Marked as such in the data files.

Frequently asked questions

What is the safe-harbor rule?

It's the minimum you must prepay to avoid an underpayment penalty. Pay at least 90% of this year's tax or 100% of last year's (110% if last year's AGI exceeded $150,000). You'll owe the remainder at filing but not a penalty.

Do I have to use quarterly payments?

Yes if you expect to owe $1,000 or more after withholding and refundable credits. If you have a W2 job alongside self-employment income, you can also increase W2 withholding to cover the gap and avoid quarterly payments entirely.

What if I underpaid?

The IRS charges an underpayment penalty on the shortfall. The penalty rate changes quarterly; it's typically federal short-term rate + 3 percentage points. It's small relative to the tax owed, but still worth avoiding.

Why is SE tax so high?

As a sole proprietor you pay both the employer and employee shares of Social Security and Medicare — 15.3% combined on 92.35% of net profit. An employee splits this with their employer, so they pay only 7.65% in FICA. The deduction for half of SE tax partially offsets the difference.

How much should I set aside from each 1099 payment?

A practical rule for most self-employed filers is to reserve 25–30% of every payment as soon as it lands. At the 22% federal bracket with no state income tax, the combined SE and income tax burden on $100,000 of net profit is roughly 33% — but the SE deduction lowers the effective rate to around 27–28% for many filers. If you are in a higher bracket (32%+) or your state has an income tax, move the reserve up to 35%. Use the calculator above with your actual numbers to get a precise figure.

Should I set aside money on gross 1099 income or on profit?

On profit — the amount left after deductible business expenses (software subscriptions, home office, mileage, equipment, health insurance premiums). Taxes are owed on net profit, not gross receipts. Tracking expenses carefully is one of the most effective ways to reduce what you owe: a $1,000 deduction at the 22% bracket and a ~14% SE rate saves roughly $360 in combined taxes.

When should I start setting aside money from 1099 income?

Immediately — as each payment arrives, not at quarter-end. The IRS assesses underpayment penalties based on when income is earned, not when you pay. Waiting until Q4 to fund all four quarters' payments can still trigger a penalty even if the annual total is correct. Moving 25–30% into a dedicated savings account with each deposit is simpler than trying to reconstruct totals later.

Should I keep the tax set-aside in a separate account?

Yes. A dedicated savings account labelled "taxes" prevents the money from being spent and makes it easy to see whether you are on track. Many freelancers use a high-yield savings account so the reserve earns a few percent while it waits. Transfer the set-aside the same day as each client payment — treating it as a non-negotiable cost of the payment keeps the math simple and eliminates the anxiety of scrambling before quarterly due dates.