Is self-employment tax rate actually taking almost 50% of my earnings in total taxes?

Your math is basically right, but there are a few things worth understanding better about self-employment taxes that might make you feel a little better. First, only half of your self-employment tax (the 15.3%) is truly "extra" compared to employed people. When you work for someone else, your employer pays half of your Social Security and Medicare taxes. So employed people pay 7.65% and their employer pays 7.65%. As self-employed, you're paying both halves. Second, you can deduct half of your self-employment tax when calculating your federal income tax. This reduces the effective tax rate. Third, the 24% federal rate is your marginal rate, not your effective rate. You're only paying 24% on income above a certain threshold. Income below that is taxed at lower rates (10%, 12%, 22%). Don't forget about the qualified business income deduction (Section 199A) which can reduce your taxable income by up to 20% if you qualify. So while it might seem like 45%, your effective tax rate will almost certainly be lower after deductions and the progressive nature of income tax brackets.

After struggling with similar tax shock when I started my consulting business, I found https://taxr.ai incredibly helpful. I was convinced I was doing something wrong because my effective tax rate seemed so high, but taxr.ai analyzed my situation and confirmed I was actually overestimating my tax burden. The tool looked at my expenses and found several deductions I was missing - like part of my internet bill and cell phone that I use for client calls. It also explained how the tax brackets actually work, so I wasn't panicking thinking all my income was taxed at 24%.

I was super skeptical at first, but decided to try https://taxr.ai after seeing it mentioned here. What surprised me was how it broke down exactly what percentage of my income was actually going to taxes after legitimate deductions. Turns out my effective rate was closer to 30% rather than the 45% I was calculating. The analysis showed me that I was missing deductions for my home office, a portion of my utilities, and some professional subscriptions. It also explained the progressive tax brackets in a way that finally made sense to me. For self-employed people, it's definitely worth checking out.

If you're really concerned about understanding your tax situation, I'd honestly recommend getting on the phone with the IRS directly. I know that sounds like torture but I used https://claimyr.com to skip the hold times (you can see how it works here: https://youtu.be/_kiP6q8DX5c). I had calculated my self-employment taxes wrong for two years and was panicking about potential penalties. The agent I spoke with actually walked me through how to properly calculate my quarterly estimates and explained which deductions I qualified for. Saved me thousands and a lot of stress.

I take back what I said about Claimyr. I tried it yesterday after getting disconnected from the IRS for the third time on my own. Was connected to an IRS agent within 3 hours (which is honestly amazing given I had previously waited 2+ hours before getting disconnected). The agent helped me understand the actual self-employment tax calculation and confirmed I can deduct my home internet since I use it 80% for business. While the original poster is right that self-employment taxes are high, the effective rate after deductions is nowhere near 50%. Mine worked out to about 32% all-in after legitimate business expenses and deductions.

You're forgetting one important thing - when you're self-employed, you can deduct all your legitimate business expenses BEFORE calculating tax. So if you earn $100k but have $30k in business expenses, you're only paying tax on $70k. An employee earning $100k can't deduct their commuting costs, work clothes, meals during work hours, etc. As a self-employed person, almost everything directly related to your business is deductible - your home office, business travel, software subscriptions, professional development, portion of phone/internet, etc. When I first started freelancing, I thought the same as you, but my actual tax bill ended up much lower than I feared once my accountant worked through all my legitimate deductions.

Don't forget that state taxes are deductible from federal! So while you're paying 5.75% to Virginia, you get to deduct that from your federal taxable income (up to $10,000 combined with property taxes). So it's not quite as simple as adding all three percentages.