Self-Employed Tax Guide: What You Need to Know in 2026
Freelancers and business owners face a more complex tax situation than employees — but also have access to significantly more tax-saving tools.
Financial Writer
Self-Employment Tax
As a self-employed person, you pay both the employee and employer portions of Social Security and Medicare — 15.3% on the first $168,600 of net earnings in 2026. The good news: you can deduct half of this self-employment tax from your gross income.
Quarterly Estimated Taxes
Employees have taxes withheld; self-employed people pay quarterly estimates (due April 15, June 15, September 15, January 15). Underpaying by more than $1,000 triggers a penalty. Use last year's tax liability as your safe harbor baseline.
The QBI Deduction
The Qualified Business Income deduction allows most self-employed people to deduct 20% of their net business income from taxable income. This is available through 2025 under current law (scheduled to expire unless extended).
Solo 401(k) or SEP IRA
Self-employed individuals can contribute far more to retirement than employees. A Solo 401(k) allows up to $69,000/year ($76,500 if 50+) in total contributions in 2026. A SEP IRA allows 25% of net self-employment income up to $69,000. These contributions dramatically reduce taxable income.
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