Taxes
Self-employed tax calculator: how your profit is taxed
When you work for yourself, your business profit is taxed two ways at once: regular income tax, and self-employment tax. Self-employment tax exists because you are both the employee and the employer, so you cover both halves of Social Security and Medicare yourself, the half a regular job would pay for you and the half it would take from your check. There is one piece of relief built in: you get to deduct the employer half of that self-employment tax when figuring your income tax. Understanding those two layers is the whole of self-employed tax planning.
This page explains how it works and how to plan for it. It does not file anything or set your figures; that stays with you and your CPA. To see the number on your own 2026 profit, the calculator runs it.
No fee and no contact for the first result.
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The two layers of self-employed tax
The first layer is income tax, on a sliding scale, the same scale that applies to any income. The second layer is self-employment tax, and it is the one that makes working for yourself feel more expensive than the same money from a job.
At a regular job, your employer quietly pays half of your Social Security and Medicare and withholds the other half from your pay. On your own, there is no employer to pay that half, so you owe both. The system softens it by letting you deduct the employer half of your self-employment tax against your income tax, so you are not taxed on money that went straight to that bill. The two layers together are why a self-employed person should plan for a noticeably higher tax bite than a salaried worker on the same gross.
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You are taxed on profit, after expenses
Self-employment tax and income tax both start from your net profit. Profit is your revenue minus your legitimate, ordinary business expenses. Tracking those expenses through the year is what keeps the profit your tax is figured on honest and as low as it should legitimately be. Which costs qualify depends on your work, so confirm them with your CPA.
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Planning for it through the year
Because no employer withholds tax for you, the system expects you to pay as you earn, generally in four estimated payments across the year rather than one bill at filing. Underpay through the year and you can owe a penalty even if you pay the full amount later.
The workable habit is to estimate your full-year tax, both layers, divide it across the four due dates, and move that share of your income aside as it arrives so each payment is already funded. A CPA sets the amounts so you neither come up short nor overpay and wait for a refund. The calculator gives you a 2026 figure to plan around. See how the math is built.
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When electing a different tax treatment helps
A sole proprietor owes self-employment tax on all of their profit. Once that profit is steady and large enough, many owners look at electing S-corp treatment, which splits the profit into a reasonable salary, where payroll tax applies, and a distribution, where self-employment tax does not. The election can lower the self-employment-tax bite, and it also brings the cost and work of running real payroll, so it only helps above a certain level.
There is no universal threshold, because it moves with your profit, the salary you can justify, and your state. That is the case for running real numbers instead of a rule of thumb. Compare S-corp and LLC treatment, and let the calculator show your own break-even.
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Why this connects to your coverage
Working for yourself usually means buying health coverage in the individual market with after-tax dollars, and handling retirement alone. Electing S-corp treatment puts you on a W-2 wage from your own business, and that W-2 status, through the right structure, can open access to a group health plan and a retirement plan a sole proprietor does not get. How the coverage is taxed for an owner is a CPA question, which is why the calculator shows your tax and coverage picture together, on your own figures. See the owner path.
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How we calculate this, and our sources
The calculator applies 2026 federal and state rules to the figures you enter, and the full report shows every line for your CPA to check. We model the numbers you and your CPA confirm; we do not guess your profit or your deductions.
The mechanics described here, self-employment tax covering both shares of Social Security and Medicare, the deduction for the employer half, and the quarterly estimated-payment expectation, follow current IRS guidance for self-employed taxpayers (IRS, 2026). Tax figures adjust every year, so this page reflects 2026 rules and is reviewed quarterly.
2026 note: reviewed for the 2026 tax year in June 2026. For a later year, confirm the current figures with your CPA. See our full method.
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Related reading
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Frequently asked questions
What is self-employment tax?
It is the tax that covers both the employer and the employee share of Social Security and Medicare on your business profit. A regular job splits that bill between you and your employer; on your own you owe both halves, with a deduction allowed for the employer half against your income tax.
How much should a self-employed person set aside for taxes?
Enough for both layers, income tax and self-employment tax, on your profit, which is more than a salaried worker pays on the same gross. A common habit is to move a meaningful slice of income aside as it comes in and adjust once you see real numbers. The calculator gives you a 2026 figure and your CPA sets the exact amount.
Do I pay estimated taxes if I am self-employed?
Generally yes. With no withholding, the system expects estimated payments through the year, usually four, instead of one bill at filing. Underpaying can trigger a penalty. Your CPA can set your amounts.
Will an S-corp election lower my self-employment tax?
It can, once your profit is high enough, by splitting profit into a salary and a distribution where self-employment tax does not apply to the distribution. It also adds the cost of running payroll, so it only helps above a certain level. The calculator shows your own break-even, and your CPA confirms it.
What does self-employed tax have to do with health coverage?
A self-employed owner usually buys individual-market coverage with after-tax dollars. Moving to a W-2 wage through the right structure can open access to a group health plan and a retirement plan. The calculator shows your tax and coverage picture together.
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