California self-employment tax
What San Diego freelancers owe on net profit
- San Diego freelancers owe the IRS 15.3% self-employment tax on top of federal income tax, and California adds only its income tax.
- The IRS charges self-employment tax once net earnings reach $400, on 92.35% of net profit (2026).
- The Franchise Tax Board (FTB) collects estimated tax in three payments: 30% by April 15, 2026, 40% by June 15 and 30% by January 15, 2027.
The IRS counts independent contractors, sole proprietors, partners and single-member LLC owners as self-employed.
California self-employment tax rate for 2026
- 12.4%Social Security, on up to $184,500 of 2026 earnings
- 2.9%Medicare, on all net earnings
- 0.9%Additional Medicare Tax above $200,000, or $250,000 for joint filers and $125,000 for married filing separately
IRS Topics 554 and 560 and SSA, 2026
A Mission Valley rideshare driver reports $40,000 net profit and no wages in 2026:
Amount subject to the tax: $40,000 × 92.35% = $36,940
Self-employment tax: $36,940 × 15.3% = $5,651.82
Deduction for half the tax, when figuring federal adjusted gross income: $5,651.82 ÷ 2 = $2,825.91
Independent contractor taxes in California
State income tax
FTB taxes freelance profit at the same 2026 income tax rates as wages, from 1% to 12.3%, with no separate California self-employed tax rate. FTB charges a further 1% Behavioral Health Services Tax on taxable income over $1,000,000.
Estimated payments
Freelancers who expect to owe FTB at least $500 after withholding and credits ($250 if married filing separately) generally pay estimates in 2026.
Disability insurance
Self-employed workers pay no State Disability Insurance unless they join the Employment Development Department's (EDD) Disability Insurance Elective Coverage.
City Business Tax Certificate
Independent contractors working in the City of San Diego need a Business Tax Certificate from the Office of the City Treasurer.
Contractor or employee
EDD treats a worker as an employee unless the hiring business meets all three parts of the ABC test; for some jobs, EDD applies the Borello test instead.
Business expenses
Freelancers who deduct business expenses lower their net profit, and so their self-employment tax. The IRS allows the self-employed health insurance deduction against income tax only, not in figuring self-employment tax.
When to hire a CPA for self-employment tax
Bring in a certified public accountant (CPA) before electing S corporation tax treatment for an LLC, to compare the tax with staying a sole proprietor. Weigh fees with how much does a CPA cost, then shortlist firms using how to choose a CPA.