Self-Employment Tax Calculator: Estimate Your 1099 Taxes (2025)

Self-employment tax is the Social Security and Medicare tax that self-employed individuals must pay on their net earnings. Known as SECA (Self-Employed Contributions Act) tax, it mirrors the FICA taxes that traditional employees have withheld from their paychecks. However, unlike employees who split these taxes with their employers (paying 7.65% each), self-employed individuals pay both portions—totaling 15.3% on their net earnings.

In 2025, self-employment income continues to surge as more Americans embrace freelancing, gig work, and entrepreneurship. With Social Security tax applying to earnings up to $176,100 and Medicare tax applying to all earnings (plus an additional 0.9% Medicare surtax for high earners), understanding your self-employment tax obligation isn't just tax compliance—it's essential financial planning that directly impacts your take-home income, estimated tax payments, and overall business profitability.

How Self-Employment Tax Calculations Work: Breaking Down the 15.3%

Self-employment tax consists of two distinct components that mirror the Social Security and Medicare taxes paid by traditional employees. Understanding each component helps you plan for tax payments, maximize deductions, and avoid surprises at tax time.

Calculating Net Earnings from Self-Employment

Before calculating self-employment tax, you must determine your net earnings from self-employment. This isn't simply your business revenue—it's your profit after business deductions multiplied by 92.35% (the adjustment factor that accounts for the fact that self-employed individuals can deduct the employer portion of self-employment tax).

• •Business Revenue: All income from your self-employment activities—1099 income, client payments, sales, etc.
• •Business Deductions: Legitimate business expenses like office supplies, equipment, software, marketing, professional services, home office, vehicle expenses, etc.
• •92.35% Adjustment: The IRS allows this reduction because self-employed individuals pay both employee and employer portions of the tax.

The SE Tax Multiplier Effect

The 92.35% adjustment creates a partial offset to the higher self-employment tax rate. For every $100 in net profit, you only pay SE tax on $92.35. Since the combined SE tax rate is 15.3%, your effective rate on your original $100 profit is approximately 14.13% ($92.35 × 15.3%). While still higher than the 7.65% employees pay, this adjustment provides some relief and recognizes that self-employed individuals bear both employer and employee tax burdens.

Real-World Example: Mark's Freelance Design Business in 2025

Meet Mark, a 34-year-old freelance graphic designer who left his corporate job two years ago to start his own business. In 2025, he's earned $85,000 from various clients (including several 1099s) and has $18,000 in legitimate business deductions for software subscriptions, equipment, home office, professional development, and marketing expenses.

Without the self-employment tax deduction, Mark would owe income tax on $67,000. However, by deducting $4,730 (half his SE tax), his taxable income drops to $62,270. In the 22% tax bracket, this saves him approximately $1,041 in federal income taxes. Mark makes quarterly estimated tax payments of $2,365 (25% of his SE tax) in April, June, September, and January to avoid underpayment penalties.