Rough estimate for comparison purposes only, assumes a simplified ~15.3% self-employment tax on freelance net income and does not account for the deduction for half of self-employment tax, state taxes, retirement contributions, or your specific tax bracket. Not tax advice, see the tax estimate tool for a more detailed quarterly estimate.
Take-home pay starts from gross freelance income, subtracts deductible business expenses to get net profit, then estimates self-employment tax (Social Security and Medicare, both halves, since there's no employer splitting it) plus income tax on what's left.
The result is an estimate, not a filed return: it doesn't know your filing status, other income, or every deduction you qualify for, so it's meant for planning and setting aside quarterly tax money, not for filing.
A consultant bills $95,000 in a year and has $12,000 in deductible expenses (software, coworking space, a portion of health insurance premiums). Net profit is $83,000.
Self-employment tax runs roughly 15.3% on net earnings up to the Social Security wage base, plus federal and state income tax on top, layered on a standard deduction and typical bracket. The combined effective rate for a freelancer at this income level commonly lands in the high-20s to low-30s percent range, which is why so many freelancers are shocked by their first tax bill after leaving W-2 work, where an employer was quietly withholding and matching taxes all year.
Gross revenue is a vanity number, take-home pay is the one that pays rent. Two freelancers billing the same $90,000 can take home very different amounts depending on their expense ratio, entity structure, and how well they've planned for tax, which is why this calculator exists separately from a basic invoice total.
The estimate covers federal self-employment tax and a general income tax estimate; state tax varies widely (some states have none), so treat the result as a national baseline and adjust for your state's rate.
As a W-2 employee, your employer pays half of Social Security and Medicare tax on your behalf without it showing on your paycheck. As a freelancer, you pay both halves yourself, which is the single biggest reason take-home pay feels lower relative to gross income.
Set it aside as you get paid, ideally into a separate account, and pay quarterly estimated taxes rather than one lump sum. It's the difference between a routine transfer and a stressful scramble every April.
A freelance rate and a salary aren't directly comparable numbers. Self-employment tax covers both the employee and employer share of Social Security and Medicare, a cost a salaried employer normally splits with you. Health insurance is usually subsidized by an employer; freelancers typically pay the full premium themselves. And unpaid time off is real: a salaried job pays for holidays, sick days, and vacation, while a freelancer earns $0 for any week they don't bill. None of that means freelancing is a bad deal, it just means the headline hourly rate needs to be noticeably higher than an equivalent salary's hourly rate to actually end up ahead.