Side Income After-Tax Calculator

Freelance and self-employment income is subject to two separate tax obligations. First, self-employment (SE) tax: 15.3% on net self-employment income (92.35% of gross to account for the employer-equivalent deduction). This covers both the employee and employer portions of Social Security and Medicare. Second, federal income tax: your net self-employment income is added to your regular income and taxed at your marginal rate. The combined effective tax rate on freelance income typically ranges from 25–40% for someone with a W-2 job.

Any ordinary and necessary business expense can be deducted from gross freelance income before calculating SE tax and income tax. Common deductions: home office (dedicated work space, calculated by square footage or simplified method), equipment and software, professional subscriptions and memberships, internet and phone (business-use portion), professional development, and health insurance premiums (100% deductible for self-employed individuals against income tax, though not against SE tax). Keeping receipts and a log of business expenses is essential.

Yes, if your expected side income tax liability (after all deductions and the SE tax deduction) will exceed $1,000 for the year, and your W-2 withholding won't cover it, you're generally required to make quarterly estimated payments. The due dates are April 15, June 15, September 15, and January 15. Failing to pay quarterly can result in an underpayment penalty. If you're new to freelancing, a good rule of thumb is to set aside 25–30% of each payment received specifically for taxes.

You can deduct half of your SE tax (the employer-equivalent portion) from your income before calculating federal income tax. This mirrors the treatment of employees, whose employer pays half of FICA separately. So on $50,000 of net self-employment income, you pay $7,065 in SE tax (14.13% effective rate after the 92.35% adjustment), and you can deduct $3,533 (half of SE tax) from income before applying income tax brackets. The calculator applies this deduction automatically.

Not exactly. SE tax is only required if your net self-employment income exceeds $400 for the year. Below that threshold, you still may owe federal income tax on the income, but you don't owe SE tax. Above $400, SE tax applies to all net self-employment income, not just the amount above $400. The $400 threshold is simply the floor for SE tax filing it doesn't create a $400 tax-free allowance.