Self-Employed Taxes: A Complete Guide for Freelancers and Business Owners
Being self-employed means more tax complexity — and more opportunity for savings. Here's what you need to understand to stay compliant and minimize your tax bill.
Self-Employment Tax
Employees split Social Security and Medicare taxes 50/50 with their employer. Self-employed people pay both halves — 15.3% on net self-employment income (12.4% Social Security + 2.9% Medicare). The good news: you deduct half of SE tax from your gross income.
Quarterly Estimated Taxes
Without an employer withholding taxes, you must pay quarterly estimated taxes to avoid penalties. Due dates: April 15, June 15, September 15, and January 15.
A general rule: set aside 25–30% of every payment you receive for taxes. This covers federal income tax + self-employment tax for most freelancers.
Key Deductions for Self-Employed
- Home office — dedicated space used regularly and exclusively for business
- Business vehicle use — mileage rate of 67 cents/mile in 2024
- Health insurance premiums — fully deductible for self-employed
- Retirement contributions — SEP-IRA allows up to 25% of net income ($69,000 max)
- Business equipment — computers, phones, tools, software
- Professional development — courses, books, conferences
SEP-IRA: The Self-Employed Retirement Power Tool
A SEP-IRA lets you contribute up to 25% of net self-employment income (up to $69,000 in 2024). This dramatically reduces taxable income and builds retirement wealth simultaneously.
Estimate Your Self-Employment Tax
Use our income tax calculator to project your annual tax liability.
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