Single
Married Filing Jointly
Married Filing Separately
Head of Household
Estimated Tax Liability
Estimated Self-Employment Tax: $0.00
Estimated Income Tax: $0.00
Total Estimated Tax: $0.00
Understanding Self-Employment and Income Tax
As a self-employed individual, you are responsible for paying both self-employment taxes and income taxes on your business earnings. This calculator helps estimate these liabilities based on your provided information.
Self-Employment Tax Calculation
Self-employment tax (SE tax) is Social Security and Medicare tax for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. Generally, you will pay SE tax if:
You worked as an independent contractor in the course of your trade or business.
You are self-employed with earnings of $400 or more.
The SE tax rate is 15.3% on the first $168,600 of net earnings for 2024 (this limit applies to the Social Security portion only; Medicare has no limit). The Medicare portion is 2.9% with no income limit. For earnings above $168,600, the SE tax rate is 2.9%.
The calculation involves these steps:
Calculate Net Earnings: Gross Business Income – Deductible Business Expenses.
Calculate Taxable Base for SE Tax: Net Earnings are multiplied by 92.35% (0.9235). This is because you can deduct one-half of your SE tax when calculating your income tax.
Apply Tax Rates:
The Social Security portion is 12.4% on earnings up to the annual limit ($168,600 for 2024).
The Medicare portion is 2.9% on all net earnings.
Total SE Tax: Sum of the Social Security and Medicare tax calculated.
Income Tax Calculation
Income tax is levied on your total taxable income, which includes your business profits (after the SE tax deduction) and any other income you may have.
The steps are:
Calculate Adjusted Gross Income (AGI): Business Net Earnings – One-Half of Self-Employment Tax + Other Income.
Calculate Taxable Income: AGI – Standard Deduction or Itemized Deductions (whichever is greater).
Determine Tax Bracket: Based on your filing status and taxable income, you fall into a progressive tax bracket.
Calculate Income Tax: Apply the appropriate tax rates to the portions of your taxable income that fall into each bracket.
Subtract Tax Credits: Reduce your calculated income tax by any applicable tax credits.
Important Notes:
Tax laws and rates are subject to change. This calculator uses current (2024) general rates and thresholds for illustration.
The deduction for one-half of self-employment tax reduces your taxable income for income tax purposes.
This calculator is an estimate and does not account for all potential deductions, credits, or complex tax situations. Consult with a qualified tax professional for personalized advice.
For 2024, the Social Security tax limit is $168,600.