Effective Tax Rate Calculator

See your true blended tax rate as a freelancer — federal income tax, self-employment tax, and state combined — versus the marginal rate on your next dollar.

Written by Dorothy Ibrahim, 10+ years in banking & finance

Reviewed by Benton Jona, EA (Enrolled Agent) — 2026-07-13

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How we calculate this

This calculator shows a freelancer's true blended tax rate — the honest "how much of my income goes to tax" number — by combining federal income tax, self-employment tax, and an optional flat state estimate, then dividing the total by net profit. It contrasts that effective rate with your marginal rate: the tax on your next dollar, which is what a deduction actually saves. Enter your net profit, filing status, tax year, and (optionally) a state rate.

The formulas

Federal tax: self-employment tax + income tax on (net profit − half of SE tax − standard deduction − QBI deduction)Computed by the shared freelancer engine (Schedule SE + Form 1040).
State tax: net profit × your flat state rateOptional; a planning approximation, not real state bracket math.
Effective rate: (federal tax + state tax) ÷ net profit
Marginal rate (next $1): income-tax bracket rate at your taxable income + (15.3% × 92.35%) SE-tax marginalThe rate at which a new deduction reduces tax.

Worked example

With the defaults — $100,000 net profit, single, 2026, no state tax — self-employment tax is $14,130 (15.3% of 92.35% of profit) and federal income tax is $8,235 on taxable income of $61,468 (after the half-SE deduction, the $16,100 standard deduction, and a $15,367 QBI deduction).
Total federal tax is $14,130 + $8,235 = $22,365, and with no state tax the total tax is the same.
Effective rate = $22,365 ÷ $100,000 ≈ 22.4% — you keep about 77.6% of each dollar of profit after tax.
The marginal rate on the next dollar is about 36.1% (the 22% income bracket plus the 14.1% SE-tax marginal), well above the effective rate because the lower brackets, standard deduction, and QBI pull the average down.

Rates, benchmarks & sources

2026 federal income-tax brackets, standard deduction, and QBI threshold. — IRS Rev. Proc. 2025-32
Self-employment tax: 12.4% Social Security + 2.9% Medicare on 92.35% of net profit. — IRS Schedule SE (Form 1040)
Up to 20% of qualified business income below the taxable-income threshold. — IRS §199A (QBI deduction)
Tax Guide for Small Business (sole proprietor Schedule C). — IRS Publication 334

Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.

What this tool doesn’t model

It assumes a sole proprietor on Schedule C taking the standard deduction, with one business and no S-corp election — itemized deductions, multiple businesses, or an S-corp change the result.
State tax is a single flat rate you enter; real state income tax has its own brackets, deductions, and rules, so treat the state line as an approximation.
The QBI deduction is applied in full below the income threshold; the tool does not model the SSTB or W-2-wage limitations that apply above it.
It is an educational estimate for planning, not tax advice, and does not replace a return prepared or reviewed by a CPA/EA.

Frequently asked 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 your 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 for Social Security and Medicare, and an optional state estimate — the full picture, not income tax alone. That is why a freelancer's effective rate is often higher than an employee's at the same income.

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, so treat the state line as a planning approximation and confirm the figure with your state's tables or a professional.

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Federal figures only unless noted. State taxes vary.