Why your effective tax rate is higher than salaried friends
W-2 employees split payroll tax with their employer. As a freelancer, you pay both halves yourself. On a $90k US net profit you'll owe ~$12,700 in self-employment tax before income tax even enters the picture.
- • US (2025): 15.3% SE tax on the first $176,100, then 2.9% Medicare above (+0.9% Additional Medicare > $200k single).
- • UK: 6% Class 4 NIC between £12,570–£50,270, 2% above.
- • Canada: 11.4% CPP self-employed up to $68,500.
- • Australia: no separate SE tax, but no employer super either — fund it yourself.
Deductions that move the needle
Track these year-round, not at filing time. Most freelancers leave 10–20% on the table by missing legitimate deductions.
- • Home office (% of rent + utilities tied to a dedicated workspace).
- • Health insurance premiums (US — deductible above the line).
- • Retirement contributions: SEP-IRA / Solo 401(k) (US), SIPP (UK), RRSP (CA), concessional super (AU).
- • Software, hardware, education, professional services, mileage.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
FAQ
Is this an official tax estimate?
No. This is an educational estimator using current published brackets. State/provincial/Scottish rates and individual deductions vary. Always confirm with a qualified tax professional.
Why do I have to pay quarterly?
Most tax authorities (IRS, HMRC, CRA, ATO) require self-employed taxpayers to pre-pay throughout the year. Underpaying triggers penalties and interest.
Should I incorporate to lower my taxes?
Sometimes. In the US, an S-corp election can reduce SE tax above ~$70–80k profit. In the UK, a limited company can be efficient at higher profit. Run the numbers with an accountant — admin overhead matters.
Important: this is not tax advice
Calculations use simplified, current published brackets for United States (2025). US estimates layer the selected state's 2025 income tax rate on top of federal — local city taxes (e.g. NYC, Philadelphia) and progressive within-state brackets are not modelled.They do not account for credits, alternative minimum tax, the Net Investment Income Tax, foreign income, R&D credits, or your personal circumstances. Always confirm with a licensed CPA, chartered accountant, or registered tax agent before filing.
How this calculator is built
Independently maintained
Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
Sourced from primary data
Benchmarks come from public AdSense / Stripe / IRS disclosures and reader-submitted data — never third-party "$X per view" claims. Full methodology.
Last reviewed
June 2026. We re-check every figure on the platform on a rolling quarterly cycle.
Editorial standards
See our editorial policy and disclaimer. Results are estimates, not advice.