How Much Tax Will I Pay Self-Employed? A Worked Example

Short answer: On $65,000 of net profit, a self-employed single filer with no other income pays roughly $13,200 in federal tax — about 20% of profit. It arrives in two parts stacked on the same profit: self-employment tax at 15.3% on 92.35% of net profit, plus ordinary income tax on what is left after deductions. Half your SE tax and a 20% qualified business income deduction both reduce the income-tax side.

Most answers to this question stop at “set aside 25–30%,” which is a reasonable planning rule and covered in how much to set aside for 1099 taxes. This page does the arithmetic instead, so you can see where the money actually goes and rebuild the calculation with your own figures.

What counts as self-employment income?

Self-employment income is net profit — what is left after business expenses — not what your clients paid you.

• Revenue is everything that came in: 1099-NEC work, 1099-K platform payouts, cash jobs, and small clients who never issued a form.
• Net profit is revenue minus legitimate business expenses. It is Line 31 of Schedule C.

Every tax figure below is calculated on net profit. This is why expense tracking is not paperwork for its own sake: a dollar of deduction you fail to record is a dollar taxed twice, once by SE tax and once by income tax.

What taxes does a self-employed person actually pay?

Three layers, and they are calculated differently:

Layer	Rate	Applies to
Self-employment tax	15.3%	92.35% of net profit, up to the Social Security wage base
Federal income tax	10%–37%, progressive	Taxable income after deductions
State income tax	0% to roughly 13%	Varies entirely by state

Self-employment tax is the part that surprises people leaving a salaried job. It covers both halves of Social Security and Medicare — the employee share you always paid, plus the employer share your employer used to pay. The breakdown is in self-employment tax, explained.

What percentage of 1099 income is taxed?

There is no single percentage, and any answer that gives one is skipping the deductions. What is true:

• SE tax is effectively 14.13% of net profit in the Social Security range — 15.3% applied to 92.35% of profit.
• Income tax is progressive, so it depends on your total taxable income, filing status and deductions.
• The combined effective rate for a typical single freelancer with no other income tends to land in the high teens to low twenties as a percentage of net profit — lower than the 25–30% set-aside rule, which is deliberately conservative and often has to cover state tax too.

Worked example: $65,000 of net profit

The assumptions. Single filer, no other income, no dependents, taking the standard deduction, no state income tax, no retirement contributions or self-employed health insurance. Revenue of $80,000 with $15,000 of business expenses, so net profit is $65,000.

2026 figures used: Social Security wage base $184,500, standard deduction for a single filer $16,100, and the 10% and 12% brackets running to $12,400 and $50,400 respectively. These are indexed annually — confirm the current numbers at irs.gov before relying on them.

Step 1 — Self-employment tax

Only 92.35% of net profit is subject to SE tax, an adjustment that mirrors the employer-side deduction a business would take.

Net profit	$65,000
× 92.35%	$60,028
× 15.3%	$9,184

Profit is well under the $184,500 wage base, so the full 15.3% applies. Above the wage base only the 2.9% Medicare portion continues.

Step 2 — The deductible half

Half of SE tax comes back as an above-the-line adjustment, reducing income for income-tax purposes.

SE tax	$9,184
Deductible half	$4,592
Adjusted gross income	$65,000 − $4,592 = $60,408

Step 3 — The qualified business income deduction

Sole proprietors can generally deduct 20% of qualified business income, capped at 20% of taxable income before the deduction.

Qualified business income	$60,408
20% of QBI	$12,082
Taxable income before QBI ($60,408 − $16,100 standard deduction)	$44,308
20% of that	$8,862
QBI deduction (the lesser)	$8,862

Step 4 — Taxable income and income tax

AGI	$60,408
− Standard deduction	$16,100
− QBI deduction	$8,862
Taxable income	$35,446

Bracket	Amount taxed	Tax
10% on the first $12,400	$12,400	$1,240
12% on $12,400–$35,446	$23,046	$2,766
Income tax		$4,006

Step 5 — The total

Self-employment tax	$9,184
Federal income tax	$4,006
Total federal tax	$13,190
Effective rate on $65,000 net profit	20.3%
Effective rate on $80,000 revenue	16.5%

Read the shape, not just the total. SE tax is 70% of the bill, and it is flat — deductions that reduce income tax do not reduce it, only business expenses do. That is why deduction tracking matters more for the self-employed than for salaried filers.

How does the number change with income?

Same assumptions, different profit levels. Treat these as planning estimates, not filing figures.

Net profit	SE tax	Federal income tax	Total federal	Effective rate
$25,000	~$3,533	~$0	~$3,533	~14%
$45,000	~$6,358	~$1,700	~$8,058	~18%
$65,000	$9,184	$4,006	$13,190	20.3%
$100,000	~$14,130	~$10,600	~$24,700	~25%

The pattern: SE tax stays a near-constant share of profit, income tax climbs as brackets fill, and the effective rate drifts upward. This is exactly why the set-aside rule scales with income rather than being one number for everyone.

Add state tax on top. Nine states have no personal income tax; others run from roughly 3% to about 13%. A California freelancer at $65,000 profit should expect several thousand dollars more.

What changes this number the most?

In rough order of impact for a solo business:

1. Business expenses. Every legitimate deduction cuts both SE tax and income tax. See self-employed tax deductions.
2. Mileage. At 72.5¢ per mile for 2026, 5,000 business miles is a $3,625 deduction — worth roughly $900 in combined tax at these rates, but only if you kept a log.
3. A retirement plan. A SEP-IRA or solo 401(k) reduces income tax, though not SE tax.
4. Self-employed health insurance. Premiums are generally deductible above the line.
5. Home office. Deductible if the space is used regularly and exclusively for business.
6. Filing status and other household income. A spouse’s W-2 withholding changes the picture entirely.

How do I actually pay it?

Not in one payment in April. The IRS expects quarterly estimated payments if you will owe $1,000 or more for the year.

• Pay online through IRS Direct Pay or EFTPS at irs.gov/payments — minutes, no forms.
• 2026 due dates: April 15, June 15, September 15, 2026, and January 15, 2027.
• Safe harbour protects you from underpayment penalties if you pay at least 100% of last year’s tax (110% for higher earners) or 90% of this year’s, whichever you can hit reliably.

The mechanics are covered in quarterly estimated taxes, explained. At filing time the whole calculation above reappears as Schedule C, Schedule SE and Schedule 1 — see how to fill out Schedule C.

What makes this calculation reliable?

Only one input actually decides the answer: your net profit. Get revenue and expenses right and every figure downstream follows. Guess at them and you are estimating your tax bill from an estimate.

Keel: Invoice Maker & Receipts keeps the two numbers that matter accurate as the year runs: what you invoiced, and what you spent. Receipts are photographed and read on device by Apple Intelligence, mileage is logged at the IRS rate, and Freeboard shows a single figure — cash minus a tax reserve, minus committed bills, minus a buffer you set — so the money for April is not money you thought was yours.

Everything stays on your iPhone. No bank connection, no cloud, no account; the App Store privacy label reads “Data Not Collected.” Freeboard is a planning estimate, not tax advice or a filing.

Keel is free with unlimited invoices, receipts and mileage; Keel Pro is a one-time $249.99 Lifetime purchase, not a subscription. Keel on the App Store.

Frequently asked questions

How much tax will I pay self-employed? On $65,000 of net profit, a single filer with no other income owes roughly $9,184 in self-employment tax plus about $4,006 in federal income tax — around $13,200, or 20.3% of profit. Your figure depends on filing status, deductions, other household income and state tax.

How do I calculate tax when self-employed? Start from net profit, multiply by 92.35% and then 15.3% for self-employment tax. Deduct half of that from profit to get AGI, subtract your standard or itemised deduction and the qualified business income deduction to get taxable income, then apply the brackets.

What percentage of 1099 income is taxed? There is no single percentage, because tax applies to net profit after expenses rather than to what clients paid you. Self-employment tax alone is about 14.13% of net profit, and the combined effective federal rate typically lands in the high teens to low twenties before state tax.

How do I pay self-employment tax? Through quarterly estimated payments online at irs.gov via Direct Pay or EFTPS, due April 15, June 15 and September 15, 2026, and January 15, 2027. The final amount is calculated on Schedule SE with your annual return, and any shortfall is settled then.

What is self-employment income? Net profit from your business — total revenue minus legitimate business expenses — not the gross amount clients paid you. It includes cash and payments no 1099 was issued for, and it is the figure on Line 31 of Schedule C.

Does the 25–30% set-aside rule mean I pay that much? No. It is a deliberately conservative planning rule that leaves room for state tax and an uneven year. Actual federal tax on a typical solo profit is often several points lower, and the surplus is simply money you get to keep.

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This article is general information, not tax advice. Figures are illustrative and indexed annually. Consult a qualified tax professional.