What Does a self employed person pay for taxes in 2025? How to calculate both rates?

The self-employment tax and income tax are calculated differently, which is why this gets confusing! For your example with $185,000 gross income and $125,000 in deductible expenses, here's how it works: The self-employment tax (15.3%) is calculated on 92.35% of your net self-employment income ($60,000). So that's approximately $8,486 in SE tax (15.3% of $55,410). For income tax (the 22% bracket you mentioned), that's calculated after taking the standard deduction (or itemized if higher) and after deducting half of your self-employment tax. So your taxable income for income tax purposes would be even lower than $60,000. These are two separate taxes that don't simply add up to 37.3% on the same amount.

I was in the exact same boat last year trying to understand all this! I finally found this site https://taxr.ai that literally saved me thousands by helping me understand what I was actually paying and why. I had a similar situation (about $170k gross with lots of expenses) and was panicking about owing a ton. The site analyzed my self-employment income and showed me that I wasn't actually paying 37% combined - that's not how it works. It also highlighted deductions I was missing like home office, health insurance premiums, and retirement contributions that reduced my taxable income even further.

Just wanted to update after trying the taxr.ai site mentioned above. I was skeptical but it actually helped me understand my self-employment taxes way better than anything else I've tried. It showed me that I was overpaying by not correctly calculating my QBI deduction and forgetting to deduct half of my self-employment tax when figuring my income tax. Just those two things saved me over $3,800! The breakdown of how self-employment tax vs income tax work separately was super clear - I finally get it now.

If you're dealing with self-employment tax questions, you might also want to talk directly with the IRS to confirm everything. I know it sounds impossible to reach them (I tried calling like 8 times and always got disconnected), but I finally used https://claimyr.com and got through in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had a complicated situation with both W-2 and self-employment income, and the agent walked me through exactly how the self-employment tax applies only to my business income, not my total income. They also explained how to correctly handle my home office deduction which was something I was nervous about.

Alright I need to admit I was wrong about the IRS call service. I tried Claimyr after posting that skeptical comment and it actually did get me through to an IRS agent in about 30 minutes. I asked specifically about the self-employment tax calculation and how it interacts with income tax. The agent confirmed everything - the SE tax applies to 92.35% of net business income, and then you get to deduct half of that SE tax before calculating your income tax. She also walked me through a QBI deduction calculation that will save me about $2,200 this year. Totally worth it just for the peace of mind knowing I'm calculating everything correctly. No more tax anxiety for me!

Don't forget about estimated tax payments when you're self-employed! This tripped me up big time my first year. Since there's no employer withholding taxes from your paychecks, you generally need to make quarterly estimated tax payments. The IRS expects you to pay as you earn throughout the year. If you wait until filing time to pay everything, you might get hit with underpayment penalties even if you pay the full amount by the filing deadline.

My tax guy told me to set aside 30% of all my self-employment income for taxes and that's worked pretty well for me. Not exactly what you asked but its a good rule of thumb if you don't want to do all the complicated math every time you get paid.

This is such a helpful thread! I'm new to self-employment and have been stressing about taxes for months. Just to make sure I understand correctly - using the original example of $185k gross and $125k expenses = $60k net income: 1. Self-employment tax: 15.3% × (92.35% × $60k) = about $8,486 2. Income tax: 22% bracket but calculated on $60k minus half the SE tax ($4,243) minus standard deduction ($13,850) = taxable income of about $41,907 3. So income tax would be roughly $4,628 (using 2024 brackets) 4. Total tax liability: $8,486 + $4,628 = $13,114 Does this math look right? And don't forget the QBI deduction could reduce that income tax even more! This is way less scary than I thought it would be.