How Do Self-Employed people and Freelancers Pay Taxes?
Freelancing offers flexibility and freedom, but it also comes with tax responsibilities that differ from traditional employment. Unlike W-2 employees, freelancers don’t have taxes automatically withheld, which means you must handle your own tax payments.
So, how do freelancers pay taxes, and what do you need to do to stay compliant and maximize deductions? Here’s your 2025 guide to freelance taxes.
Do Freelancers Have to Pay taxes?
Yes! The IRS considers freelancers, independent contractors, and gig workers as self-employed individuals. This means you’re responsible for paying:
Federal income tax (based on tax bracket)
Self-employment tax (SE tax) – Covers Social Security & Medicare (15.3%)
State income tax (if applicable)
Quarterly estimated tax payments (pre-payments of the above taxes)
Tax Tip: Even if you only freelance part-time, you must still report and pay taxes on any earnings over $400 per year.
Understanding Self-Employment Tax (SE Tax)
Unlike W-2 employees who share payroll taxes with their employer, freelancers must pay the full 15.3% self-employment tax:
12.4% for Social Security
2.9% for Medicare
Example: If you earned $50,000 from freelancing in 2024: $50,000 × 15.3% = $7,650 in self-employment tax
Tax Tip: You can deduct half of your self-employment tax when filing your return!
Must-Know Freelance tax Deductions
Freelancers can deduct many business expenses to lower their taxable income!
Home Office Deduction – If you have a dedicated workspace, you can deduct a portion of rent, utilities, and internet.
Mileage Deduction – Deduct business-related miles driven at 70¢ per mile in 2025.
Phone & Internet – If used for business, a portion is deductible.
Software & Subscriptions – Adobe, QuickBooks, Canva, etc.
Business Travel – Flights, hotels, meals (50% deductible).
Marketing & Advertising – Website, social media ads, business cards.
Education & Training – Courses, certifications, books.
Tax Tip: Keep detailed records of expenses and receipts to back up your deductions!
Freelancers must handle their own taxes, but with proper planning and deductions, you can maximize savings and avoid penalties.
Need help with self- employed and freelancer taxes? Let Tax Charm help you navigate quarterly payments, deductions, and tax filings with ease!