New freelancers are often shocked by their first self-employment tax bill. Employees see only half of payroll taxes on payslips, while self-employed individuals pay both employer and employee portions.
For tax year 2026, the self-employment tax rate is 15.3%, combining 12.4% Social Security and 2.9% Medicare. The 15.3% rate applies to 92.35% of net self-employment earnings, not gross revenue.
The 12.4% Social Security portion caps at the $184,500 wage base, while the 2.9% Medicare portion has no cap. Taxpayers can deduct half of their self-employment tax when calculating adjusted gross income.
Expecting to owe $1,000 or more in net tax triggers mandatory quarterly estimated payments via Form 1040-ES.
What did you set aside for tax in your first year self employed?
(For educational purposes only. Not financial advice.)
