Self-employed tax vs freelancer tax
Whether you call yourself a freelancer, consultant, or self-employed professional, one thing is certain — the IRS calls you a business owner. And that means your taxes work differently from traditional employees.
Yet many new freelancers are confused: Is there really a difference between “self-employed tax” and “freelancer tax”?The short answer — they’re closely related but not identical.
In this in-depth guide, we’ll clear the confusion, explain how both work, and help you understand which taxes you actually owe, how to calculate them, and how to avoid penalties. By the end, you’ll know exactly what “self-employment tax” means — and how to manage it like a pro.
Defining the Terms: Self-Employed vs. Freelancer
Freelancer
A freelancer typically provides services to multiple clients without being on their payroll. Writers, designers, marketers, or developers often fit this category.
Freelancers are usually paid per project or per hour, and receive Form 1099-NEC at tax time — not a W-2.
Self-Employed
The term self-employed is broader. It includes freelancers, but also:
- Independent contractors
- Sole proprietors
- Small business owners
- Gig workers (like Uber drivers or Etsy sellers)
So while every freelancer is self-employed, not every self-employed person is a freelancer.
Example:
A freelance writer working with five clients and a home baker selling cookies both fall under the self-employed umbrella, but their income sources and deductions differ.
What Is Self-Employment Tax?
Self-employment tax covers Social Security and Medicare contributions — the same taxes employers usually split with employees.
When you’re self-employed, you pay both portions yourself. The total is 15.3% of your net earnings.
- 12.4% → Social Security
- 2.9% → Medicare
Example:
If you earned $50,000 in freelance profit after expenses:
$50,000 × 15.3% = $7,650 in self-employment tax.
Use the Freelance Tax Calculator to estimate yours in seconds.
The Freelancer’s Tax Stack: More Than Just Self-Employment Tax
Freelancers also owe federal income tax (and usually state income tax). Your total tax bill combines three parts:
| Type of Tax | Who Pays It | Rate (Approx.) |
| Federal Income Tax | Everyone | 10–37% based on bracket |
| State Income Tax | Depends on state | 0–13% |
| Self-Employment Tax | Freelancers/self-employed | 15.3% |
Pro tip: Set aside 25–30% of your income for taxes. It’s better to save a little extra than to face an unexpected IRS bill.
If you’re unsure about how much to pay, read How to Pay Estimated Taxes Without Stress.
Calculating Self-Employment Tax (Step by Step)
- Add up your total freelance income.
- Subtract your business expenses (software, office supplies, subscriptions).
- Multiply your net income by 92.35% (the IRS adjustment).
- Multiply the result by 15.3%.
That’s your self-employment tax.
Reference: IRS Schedule SE — Self-Employment Tax.
How Freelancers Report Taxes
You’ll report your income using Schedule C (Profit or Loss from Business) and Schedule SE for self-employment tax. Both attach to your Form 1040.
Freelancers also make quarterly estimated tax payments to cover income and self-employment taxes throughout the year.
Guide: IRS: Estimated Taxes for Individuals.
Common Deductible Expenses for Freelancers
Knowing what you can deduct reduces your tax bill — legally.
Here are the most common deductions:
- Home office: Rent, utilities, internet (pro-rated)
- Software: Tools like Canva, Grammarly, or Adobe
- Marketing: Ads, website hosting, domain renewals
- Travel: Client meetings, mileage, lodging
- Professional services: Accountants, legal advice
See our guide: Top 10 Freelance Tax Deductions You Need to Know in 2025.
What’s the Difference in How You File?
There’s technically no separate tax form for freelancers vs. self-employed individuals — they use the same IRS documents.
However, the difference lies in:
- Income sources: Freelancers get 1099s from clients; small business owners may issue invoices or receive sales income.
- Expense types: Freelancers claim business-related service expenses; self-employed shop owners may claim inventory, rent, or payroll.
- Scale: Freelancers usually operate as sole proprietors; larger self-employed businesses may form LLCs or S Corps for tax benefits.
Reference: IRS Small Business and Self-Employed Tax Center.
When Does It Make Sense to Register as a Business?
If you’re earning more than $50,000/year from freelance work or have multiple clients, consider forming an LLC.
Benefits include:
- Personal liability protection
- Easier bookkeeping
- Option to elect S-Corp status (which can reduce self-employment tax)
Learn more about structure options in Freelancers vs Self-Employed: What You Need to Know for Taxes & Deductions.
State Taxes: The Overlooked Difference
Freelancers and other self-employed workers owe state income taxes if their state requires it.
- No state tax: Texas, Florida, Washington
- High state tax: California, New York, Oregon
Rates and rules vary, so check your state’s tax department before you file.
The IRS Sees You as Both Employer and Employee
This is the biggest mindset shift for freelancers.
You’re not just the worker — you’re also the business owner responsible for:
- Paying both halves of payroll tax
- Filing quarterly reports
- Keeping accurate records
That’s why it’s smart to use tools like QuickBooks Self-Employed or Wave Accounting to automate your tracking.
Reference: QuickBooks Self-Employed for Tax Tracking.
Self-Employment Tax vs. Income Tax — A Practical Comparison
| Tax Type | Who Pays | Rate | Purpose |
| Self-Employment Tax | All freelancers & self-employed | 15.3% | Social Security & Medicare |
| Federal Income Tax | Based on income bracket | 10–37% | Government revenue |
| State Income Tax | Varies by location | 0–13% | State programs |
Both taxes apply to freelancers, but self-employment tax is what makes being self-employed unique.
How to Lower Your Self-Employment Tax Legally
You can’t avoid it entirely, but you can reduce your taxable income:
- Claim every legitimate deduction.
- Contribute to a SEP-IRA or Solo 401(k).
- Form an S-Corporation if it fits your situation.
Reference: IRS Self-Employed Retirement Plans.
The Quarterly Tax Cycle Simplified
You’ll make four payments a year, usually through IRS Direct Pay:
| Quarter | Due Date |
| Q1 | April 15 |
| Q2 | June 15 |
| Q3 | September 15 |
| Q4 | January 15 (next year) |
Each payment covers both self-employment and income taxes.
For help staying on schedule, check How to Pay Estimated Taxes Without Stress.
Tools That Make Freelance Taxes Easier
- Freelance Tax Calculator: Quickly estimate total owed taxes.
- Wave Accounting: Free bookkeeping tool for small businesses.
- QuickBooks Self-Employed: Tracks mileage and income automatically.
- IRS2Go App: Pay directly via mobile.
Reference: IRS2Go Official App Info.
Keep Stress Low During Tax Season
Taxes are part of freelancing, but they don’t need to cause burnout.
Set aside time monthly to review expenses, categorize transactions, and forecast taxes.
If money worries affect your focus or confidence, explore mindfulness and self-esteem tips at SelfWorthSelfLove.com.
The bottom line: Freelancers and Self-Employed Pay the Same Core Taxes — But Mindset Matters
At the end of the day, “freelancer tax” and “self-employed tax” refer to the same structure — but understanding your role as both worker and business owner makes all the difference.
When you track expenses, pay quarterly, and plan strategically, you stay ahead of the IRS — and your stress level drops too. Bookmark FreelanceTaxCalc.com for tools, calculators, and guides designed to make taxes simple, transparent, and freelancer-friendly.