GUIDE • 1040-ES CALCULATION

How to Calculate Quarterly Estimated Taxes as a Freelancer: Step by Step

The whole calculation fits on an index card: project your net profit, apply self-employment tax, add income tax, divide by four. The intimidating part is not the math, it is knowing which number goes where. So here is the whole thing, worked through once with real numbers.

You do not need to be exact. The IRS penalizes underpayment, not imperfect arithmetic. If your estimate lands close, and the safe harbor rules in our 110% safe harbor guide cover the rest, you are fine. Precision is for the April return; the quarterly payments are educated installments.

Step 1: Project your net profit, not your revenue

Take your expected gross invoices for the year and subtract every business expense: software, phone, mileage, insurance, home office, equipment, contractor help. The IRS taxes the net, so start from the net. Say you bill $90,000 and spend $18,000 on business expenses. Your net profit is $72,000, and that number drives everything below.

The mistake to avoid: calculating on revenue. I have seen freelancers send the IRS a quarter of their gross income and then realize they paid tax on money they spent on the business. Expenses come off first, always.

Step 2: Apply self-employment tax

Self-employment tax is 15.3%: 12.4% for Social Security plus 2.9% for Medicare. It applies to 92.35% of your net profit, a small IRS adjustment that is built into the math. On $72,000 of net profit: $72,000 x 0.9235 = $66,492 of net earnings, and 15.3% of that is $10,173.

Then, half of that self-employment tax, $5,087, is deductible from your income as an above-the-line deduction. It lowers the income-tax base in the next step. Note it; this is the line freelancers forget most.

Step 3: Add federal income tax

Take your net profit, subtract half the SE tax, subtract your deductions, and run the result through the federal brackets. On our example: $72,000 minus $5,087 minus the standard deduction leaves roughly $51,000 of taxable income for a single filer, which works out to about $6,400 of federal income tax at 2026 brackets. Your number will differ with your state, filing status, and other income, but the shape of the calculation is the same.

The full example at a glance

Net profit$72,000

Self-employment tax (15.3% of 92.35%)$10,173

Federal income tax (approx.)$6,400

Annual estimated tax$16,573

Each quarterly payment$4,143

Illustrative example for a single filer with no other income; confirm against Form 1040-ES for your situation.

Step 4: Divide by four and pay on the IRS schedule

The annual figure divided by four is each quarterly payment: about $4,143 in the example. Pay on the IRS dates (April 15, June 15, September 15, January 15) through IRS Direct Pay or EFTPS. The quarters are not actually even, the second one covers only April and May, so if your income is lumpy, the annualized income installment method lets you match payments to when the money arrived. See our 2026 and 2027 due-date calendar for the full schedule.

The 25-30% rule: if the math feels like too much, set aside 25 to 30% of every client payment in a separate savings account the moment it arrives. That range covers SE tax plus federal income tax for most freelancers and leaves a buffer. It is not the calculation, but it is the habit that makes the calculation painless.

Next steps: Run your own numbers through the Quarterly Estimated Tax Calculator for a per-quarter payment. New to this? Check whether you even need quarterly payments with a W-2 job first.

Frequently asked questions

How do freelancers calculate quarterly estimated taxes?

Project your annual net profit (revenue minus business expenses), calculate self-employment tax at 15.3% on 92.35% of that profit, add federal income tax on your taxable income, subtract any withholding or credits, and divide the total by four. That is each quarterly payment.

What percentage of freelance income should I set aside for taxes?

25 to 30% of every payment you receive is the common rule of thumb. It covers the 15.3% self-employment tax, federal income tax, and leaves a buffer for state tax. Park it in a separate savings account the moment each payment arrives.

Do I owe quarterly taxes if I also have a W-2 job?

Maybe not. If your W-2 withholding is large enough to cover the safe harbor (100% or 110% of last year's tax), the withholding counts as if paid evenly all year, which can cover the freelance income too. Run the numbers before writing separate checks.

What is the 92.35% adjustment for self-employment tax?

The IRS lets you apply self-employment tax to 92.35% of your net profit rather than the full amount, roughly the employer-equivalent portion. It is a small reduction that is built into the math, and forgetting it means overpaying.

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