Effective Tax Rate Calculator
See your true blended tax rate as a freelancer — federal income tax, SE tax, and state combined — vs. the marginal rate on your next dollar.
Your details
Rough figures are fine — you can refine later.
How we calculate this
We compute total federal tax with the shared freelancer engine, then divide by net profit for the effective rate. All rates and caps come from our versioned tax-constants.json.
1. Federal tax. freelancerFederalTax returns self-employment tax plus federal income tax on taxable income (net profit − half of SE tax − standard deduction − QBI deduction).
2. State tax. Your net profit × the flat state rate you enter (optional).
3. Effective rate. (Federal + state tax) ÷ net profit.
4. Marginal rate. The income-tax bracket at your taxable income plus the SE-tax marginal (15.3% × 92.35%) — the tax on your next dollar of profit, useful for valuing a deduction.
Assumptions: sole proprietor on Schedule C, standard deduction, one business, no S-corp election. State handling is a flat approximation.
Primary sources
- IRS Form 1040 and Schedule SE, Self-Employment Tax
- IRS Publication 334, Tax Guide for Small Business
- IRS Qualified Business Income Deduction (Section 199A)
Effective rate vs. marginal rate — the number people get wrong
When freelancers panic about taxes, they're usually staring at the wrong number. They see "22% bracket" or "24% bracket" and assume that's what they pay on everything. It isn't. That's your marginal rate — the tax on your *next* dollar. What actually leaves your bank account, as a share of your whole profit, is your effective rate, and it's almost always meaningfully lower.
The gap exists because the U.S. tax system is progressive. Your first dollars of taxable income are taxed at 10%, the next band at 12%, and so on. Layer in the standard deduction (which shelters a chunk of income entirely) and the QBI deduction (which can remove up to 20% of qualified business income), and the average rate across all your income lands well below the top bracket you touch.
Why freelancers need both numbers
For a self-employed person the effective rate has to include more than income tax. You also owe self-employment tax — 15.3% covering both halves of Social Security and Medicare — on most of your profit. This tool blends federal income tax, SE tax, and an optional state estimate into one honest effective rate, so "what percentage of my income goes to tax?" finally has a real answer.
The marginal rate still matters, just for a different job. When you're deciding whether a deduction is worth chasing, or whether to take on one more project, the marginal rate tells you what that next dollar is really taxed at — income bracket *plus* the SE-tax marginal. That's why a $1,000 deduction can save a freelancer far more than a $1,000 deduction saves a salaried employee.
How to use these figures
- Plan cash with the effective rate. Multiply it by your expected profit to know your total annual tax, then set aside a twelfth each month.
- Make decisions with the marginal rate. Evaluating a write-off, a retirement contribution, or extra work? The marginal rate is the number that changes.
- Watch what pulls the average down. If your effective rate looks surprisingly low, it's the standard deduction, the low brackets, and QBI doing their job — not an error.
What this estimate assumes
This is a planning estimate for a sole proprietor or single-member LLC filing on Schedule C, taking the standard deduction, with one business and no S-corp election. State tax is treated as a flat rate you supply — real state systems have their own brackets and rules. It doesn't model credits, other household income, or itemized deductions.
For anything you'll actually file — multiple income sources, an S-corp, state nuances, credits — confirm with a qualified tax professional. Use the number here to plan, not to file.
Common questions
What is the difference between effective and marginal tax rate? + −
Your marginal rate is the tax on your next dollar of income — the top bracket you reach, plus self-employment tax. Your effective rate is your total tax divided by your total profit: the blended average across every bracket. The effective rate is almost always lower, and it is the honest number for "how much of my income goes to tax."
Does this include self-employment tax? + −
Yes. For a freelancer the effective rate here blends federal income tax, the 15.3% self-employment tax (Social Security + Medicare), and an optional state estimate — the full picture, not income tax alone.
Why is my effective rate lower than I expected? + −
Three things pull it down: the standard deduction shelters the first slice of income, the lower brackets tax early dollars at 10–12%, and the QBI deduction can remove up to 20% of qualified business income from tax. Together they make the average rate meaningfully lower than the bracket you land in.
Does this account for my state taxes? + −
Only as a flat estimate you enter. Real state tax has its own brackets, deductions, and rules — treat the state line as a planning approximation and confirm with your state’s tables or a professional.
Keep going
Prepared for tax year 2026. Every rate and cap on this page cites a primary IRS or SSA source. Estimates only — not tax or financial advice. — for planning purposes only, not tax, legal, or financial advice.