US Freelancer Tax Guide: What You Actually Owe

The three taxes on every US freelancer

As a US freelancer, three separate taxes come out of your work: federal income tax, self-employment (SE) tax, and — in most states — state income tax. Nothing is withheld for you. You're the payroll department now.

1. Federal income tax

Federal income tax is progressive. For a single filer, roughly the first ~$12,000 is offset by the standard deduction, then rates step up through 10%, 12%, 22%, 24%, and higher bands. Most solo freelancers clearing $60k–$150k of net profit land squarely in the 22–24% marginal band, with an effective rate a few points lower.

2. Self-employment tax (~15.3%)

SE tax is the freelancer's version of FICA. As an employee, you and your employer each pay 7.65% toward Social Security and Medicare. As a freelancer, you pay both halves: 12.4% Social Security (up to the annual wage base, around $168k) plus 2.9% Medicare (no cap) — 15.3% total on net self-employment earnings. You do get to deduct half of it against income tax.

3. State income tax

State tax varies wildly. Nine states (Texas, Florida, Washington, Tennessee, and a few others) have no state income tax. California tops out over 13%. Most states sit in the 3–7% effective range for a mid-income freelancer. Budget for it based on where you're a resident, not where your clients are.

A worked example: $10,000/month

Say you're a US freelancer averaging $10,000/month in net profit, single, no state income tax:

• Gross net profit: $10,000
• SE tax reserve (~15.3%): −$1,530
• Federal income tax reserve (~18% effective on the remainder): −$1,525
• State income tax: $0 (state-dependent)
• Real take-home: ~$6,945 — about 69% of gross.

Add California and you'd knock roughly another $700–$900 off the top. That's why the safe US reserve is 30–35% of gross for a no-state-tax freelancer, and 35–40%+ once state tax enters the picture.

Quarterly estimated payments

If you'll owe $1,000+ in tax for the year, the IRS wants estimated payments four times: April 15, June 15, September 15, and January 15. Miss them or underpay and you'll owe an underpayment penalty even if you settle at year-end. The safest habit is to move your reserve percentage into a second account every payment day, then send quarterly checks straight from that account.

S-corp, LLC, sole prop — does it matter?

For most freelancers, LLC vs. sole proprietor doesn't change tax at all — a single-member LLC is a "disregarded entity" and taxed identically. S-corp election can save on SE tax if your net profit is high enough (typically $80k+/year net) — but adds payroll, filings, and accountant fees. Run the math with a CPA; it's a real decision, not a hack.

Try it with your numbers

Plug your monthly gross and marginal rate into the US freelance take-home calculator to see the split. The framework for how to actually save your reserve every payment day is in the set-aside guide.

Automate the whole thing

Incomly tracks your income, subscriptions and costs and shows your real take-home — after tax and self-employment reserves — in real time.