Net profit calculator for freelancers
Revenue minus expenses is not the number you spend.
Your P&L says one number. Your bank account says another. The gap is SE tax, income tax, state tax, and retirement — and most freelancers underestimate the gap.
Enter your gross revenue, deductible expenses, and retirement target. The calculator shows take-home after every layer.
The number freelancers actually want to know
Revenue minus expenses looks like profit, but it is not. Self-employment tax alone is 15.3% of net earnings, and federal income tax sits on top of that. Retirement contributions and state tax add more layers. The only number that matters for your actual take-home is the final one — and most freelancers never calculate it because it is fiddly.
This calculator runs the full arithmetic: gross revenue, deductible expenses, self-employment tax, federal and state income tax, retirement contributions, and the resulting take-home profit.
Why "profit" on your P&L is not the money you keep
A profit-and-loss statement stops at net profit — that is correct for accounting, but wrong for personal planning. Net profit is the starting line for three more deductions: the employer half of SE tax (which is deductible), federal income tax, and state income tax. Retirement contributions are optional but usually intentional for freelancers. After all of those, what remains is the money that actually lands in your account.
The gap between "net profit" and "take-home" is usually 30%–50% of net profit at moderate incomes. That is not a bug — it is what the system costs. Planning around the gross profit number is what gets people in trouble in April.
Self-employment tax is the hidden layer
W-2 employees share the Social Security and Medicare tax with their employer. Freelancers pay both halves — 15.3% on net earnings up to the Social Security wage base ($176,100 for 2025), then 2.9% Medicare on everything above. Half of that SE tax is deductible against income tax, which the calculator applies automatically. The other half is not — it is a pure cost of being self-employed.
Where retirement fits in
Retirement contributions reduce your taxable income and your take-home simultaneously. The calculator lets you enter a percentage of net profit (up to the Solo 401(k) cap) and shows the after-tax trade-off: you shelter more now, keep less today. At a 25% marginal bracket, every dollar contributed saves you about 25 cents in taxes, so the real cost is closer to 75 cents per dollar sheltered.
State tax varies enough to matter
Some states have no income tax; others tax at 10%+. The calculator includes a state-rate input so you see the impact of living in California versus Texas, for example. If you do not file a state return, enter zero.
Use this to stress-test rate changes
Raising your rates by 20% does not lift take-home by 20%, because the tax layers compress the benefit. Run the calculator before and after to see the real delta. It is the only way to know whether a rate increase clears your personal cash-flow floor.
Estimates only. Uses 2025 federal brackets (single filer), 2025 SE tax rates (12.4% Social Security up to $176,100, 2.9% Medicare), and the standard deduction of $14,600. This is a planning aid, not a tax computation. Consult a CPA for your exact situation.
Frequently asked questions
Why does my take-home feel smaller than my net profit?
Because net profit is before SE tax, federal tax, state tax, and retirement. Each layer takes a bite, and the combined bite is usually 30–50% of net profit at moderate income levels. The calculator shows each layer explicitly so you know where the money goes.
Is half of SE tax really deductible?
Yes — the employer portion of self-employment tax is deductible on Schedule 1, which reduces your taxable income. The calculator applies that deduction automatically. The employee portion (the other half) is the cost you pay for being self-employed.
Does this include FICA as a W-2 employee?
No. This is for 1099 / self-employment income only. W-2 employees do not pay SE tax — their FICA is split with the employer. This calculator is for freelancers and business owners.
What rate should I use for state tax?
Enter your effective state income tax rate as a percentage (e.g. 5.5 for 5.5%). If your state has no income tax, enter 0. Some states have progressive brackets — use your projected effective rate, not your top marginal rate.
How much should I contribute to retirement here?
There is no single right answer. A common freelance target is 10–20% of net profit into a Solo 401(k) or SEP IRA. Enter whatever percentage you intend, and watch how it changes the take-home. The trade-off is real: more sheltered now means less spendable today.
What about the standard deduction?
The calculator uses the 2025 standard deduction of $14,600 for single filers. If you itemise, enter the itemised amount instead (or adjust the sdeduction field). The standard deduction is a flat reduction before tax brackets apply.