This guide is general information, not tax advice. Review your situation with a tax professional.
How self-employment tax is calculated
When you work for yourself, no one withholds tax from your pay. You're responsible for two federal taxes, and usually a state tax too:
- Self-employment tax (15.3%). This is Social Security (12.4%) and Medicare (2.9%), the same taxes an employer would split with you. It applies to 92.35% of your net earnings, and the Social Security part stops at the yearly wage limit ($176,100.00 for 2025). You generally owe it once your net self-employment earnings reach $400.
- Federal income tax. Charged on your profit after deductions, at your bracket rates. You can deduct half of your self-employment tax before working this out.
- State income tax. Depends on where you live. Some states have none.
Step by step, for $60,000 of profit
- Start with your net profit: income minus business expenses and mileage. $60,000.
- Multiply by 92.35% to get net earnings from self-employment. $55,410.00.
- Multiply by 15.3% (below the Social Security limit). Self-employment tax: $8,477.73.
- Deduct half of that ($4,238.87) and your standard deduction, then apply the income tax brackets. Federal income tax: $4,562.84.
A worked example
Say you're single and your profit for the year is $60,000, with no other income:
- Self-employment tax$8,477.73
- Federal income tax (after standard deduction)$4,562.84
- Total for the year$13,040.57 (22%)
- Each quarterly payment$3,260.14
Based on 2025 federal figures. State tax would be added on top.
How to track mileage and receipts when you're self-employed
You only pay tax on profit, so every business expense and every business mile lowers your bill.
- Mileage: with the standard mileage rate you can deduct 70¢ for each business mile driven in 2025. Keep a log of the date, where you went, the business purpose and the miles. Driving from home to a regular workplace counts as commuting, not business.
- Receipts: keep a record of equipment, software, supplies and other business costs, with the receipt and a category. A photo is easier to keep than paper.
Self-Employment Tax Hub has a mileage log and receipt photos built in. With Pro, AI receipt reading fills in the merchant, date, total and category from your photo, and you check it before saving.
How to estimate and pay quarterly taxes
- Estimate your profit for the full year.
- Work out the self-employment tax, income tax and any state tax on it. The calculator above does this.
- Divide the total by four. That's each quarterly payment.
- Pay the IRS online by each due date, and update your estimate if your income changes.
If you expect to owe $1,000 or more for the year, the IRS expects you to pay during the year in four estimated payments, usually due:
- April 15
- June 15
- September 15
- January 15 (next year)
When a date falls on a weekend or holiday, it moves to the next business day. Paying late or too little can lead to an underpayment penalty.
Safe harbor: you can generally avoid the penalty by paying at least 90% of this year's tax, or 100% of last year's tax (110% if last year's adjusted gross income was over $150,000), spread across the four payments.
A simple habit that works
- Open a separate savings account just for taxes.
- Each time a client pays you, move your set-aside percentage into it.
- Log the income, receipts and miles as you go.
- Before each due date, check your estimate and make the payment.