How self-employment tax actually works
- 1Start with net profit from Schedule C — revenue less allowable business expenses.
- 2Multiply by 92.35%. That is the base the tax is calculated on.
- 3Apply 15.3% up to the Social Security wage base, then 2.9% Medicare on everything above it.
- 4Deduct half of the resulting SE tax on your Form 1040 as an adjustment to income.
- 5Add income tax on top, at your marginal federal and Oregon rates.
The TriMet self-employment tax nobody mentions
If you carry on business within the TriMet district — most of the Portland urban area — self-employment earnings are subject to a separate TriMet self-employment tax, filed with Oregon on its own form. It is small as a percentage and large as a surprise, because national tax software does not prompt for it and freelancers who moved here have never seen it. Details on the Oregon transit taxes page.
Quarterly estimates
Self-employed people pay as they go. Miss the quarterly deadlines and the penalty is calculated per quarter, so catching up in December does not undo an underpayment from April. We set up a schedule that reflects your actual cash flow rather than four identical payments — see quarterly estimated taxes.
Deductions we look at hardest
- Home office — the actual-expense method usually beats the simplified rate for Portland-area rents
- Vehicle mileage, with a contemporaneous log; reconstructed logs do not survive an audit
- Health insurance premiums as a self-employed deduction
- Retirement contributions — a solo 401(k) or SEP can move a five-figure amount out of taxable income
- Qualified business income deduction, where your activity and income level qualify
I only made a few thousand freelancing. Do I still file?
Self-employment tax generally applies once net self-employment earnings reach $400. Income tax may or may not be owed depending on your total household picture, but the SE tax threshold is low.
Do I need an LLC?
An LLC is a liability structure, not a tax structure. A single-member LLC files exactly the same Schedule C as a sole proprietor. Whether an S election helps is a separate question — see entity selection.
What if I did not pay quarterlies this year?
File anyway, pay what you can, and we will calculate the underpayment penalty precisely rather than letting it accrue. Then we set up next year properly.
I live in Washington and freelance for Oregon clients. Do I owe Oregon tax?
It depends on where you performed the work, not where the client is. This is the cross-border question and it is worth getting right.
Talk it through before filing season starts
Start with a complimentary 15-minute introductory call about your situation and whether we are a good fit. No tax advice is given on that call.
Written by
Enrolled Agent, Oregon Licensed Tax Consultant
License number: Enrolled Agent 00160070-EA · Oregon Licensed Tax Consultant 35746-C
Heather has spent more than a decade preparing individual and business returns across the Portland metro and the Columbia Gorge, and holds unlimited rights to represent taxpayers before the IRS.
Last reviewed
This page is general information about Oregon, Washington and federal tax rules, not advice about your own return. Thresholds and rates change every year. Figures were verified as of August 2026 — check the linked official sources, or talk to us about your situation.