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Freelance Oct 28, 2025 8 min read
Self-Employment Tax Explained: What Freelancers Need to Know
A deep dive into self-employment tax, including how it's calculated and strategies to reduce it.
Self-employment tax consists of Social Security (12.4%) and Medicare (2.9%) taxes. As a freelancer, you pay both the employer and employee portions, totaling 15.3%.
The Deduction
You can deduct half of your self-employment tax from your adjusted gross income.
S-Corp Strategy
Forming an S-Corp allows you to pay yourself a salary (subject to SE tax) and take the rest as distributions (not subject to SE tax), potentially saving thousands.