In April, many independent contractors and gig workers must pay quarterly taxes instead of a single lump sum. This requirement applies when an employer doesn’t withhold taxes from paychecks, a common situation for freelancers, delivery drivers, rideshare workers, and other self-employed professionals.

Why Gig Workers Pay Quarterly Taxes

Unlike traditional employees, gig workers don’t have federal or state income tax, Social Security, or Medicare automatically withheld from their pay. They must track their income, estimate how much they owe, and pay those taxes themselves.

Paying quarterly taxes promotes better financial planning. By setting aside money and paying throughout the year, gig workers avoid facing an overwhelming tax bill during filing season.

You must pay quarterly taxes if both of the following conditions apply:

1. You expect to owe at least $1,000 in taxes for the year.
2. You expect your withholdings and credits to cover less than 90% of your current year’s taxes or 100% of your prior year’s taxes, whichever is lower.

These thresholds may differ for people with farming, fishing, or higher-income earnings.

Understanding the Self-Employment Tax

Gig workers file an annual return but must make estimated quarterly tax payments. These payments include two main components:

• Self-employment tax, which covers Medicare and Social Security.
• Income tax, based on your business profits and any additional income.

In 2025, the self-employment tax rate is 15.3% on net earnings up to $176,100. That includes:

• 12.4% for Social Security
• 2.9% for Medicare

Once your income exceeds $176,100, the Social Security portion stops, but the 2.9% Medicare tax continues.

Additionally, a 0.9% Medicare surtax applies to:

• Married couples filing jointly with income over $250,000
• Married individuals filing separately with income over $125,000
• Single filers earning over $200,000

Qualified Business Income Deductions

Gig workers can claim several deductions to lower their taxable income. Common examples include:

Home Office Deduction

If you work from a dedicated space in your home, you can deduct a portion of your rent, mortgage, utilities, and maintenance costs, as long as the space is used exclusively for work.

Vehicle Expenses

If you use your vehicle for deliveries or client visits, you can deduct business-related expenses such as gas, repairs, and insurance. You can claim the standard mileage rate or actual expenses, whichever offers greater savings.

Health Insurance Premiums

Self-employed individuals can deduct premiums paid for health insurance covering themselves, their spouses, and dependents. This deduction is especially valuable for those without employer-provided coverage.

How to Calculate Your Quarterly Payments

Here’s how to estimate what you owe:

1. Calculate your net income: Subtract allowable deductions from your total earnings.
2. Multiply your net income by 92.35%: This accounts for deductible portions of self-employment tax.

3. Apply the 15.3% tax rate:

   • 12.4% covers Social Security (up to $176,100 for 2025).
   • 2.9% covers Medicare (applies to all earnings).
4. Add the results: The total equals your estimated self-employment tax.

You’ll then add any income tax you owe on your profits to determine your total quarterly payment.

Quarterly Tax Deadlines for 2025–2026

To avoid underpayment penalties and interest, pay your estimated taxes by these due dates:

Missing a payment may result in penalties, even if you pay your full tax bill at year’s end.

Tools and Strategies to Stay on Track

Managing quarterly taxes takes discipline, but these strategies make it easier:

• Track all income and expenses: Save invoices and receipts for accurate reporting.
• Separate business and personal finances: Use dedicated bank accounts and credit cards.
• Set aside tax money regularly: Save about 25–30% of each payment you receive.
• Use tax preparation software: Automated tools simplify calculations and reminders.
• Consult a tax professional:A CPA or tax advisor can ensure accuracy and help you claim all eligible deductions.

Takeaway

Unlike traditional employees, gig workers must take charge of their own taxes. Paying quarterly helps you confidently manage cash flow, avoid penalties, and prepare for tax season. You can stay compliant and maintain financial stability throughout the year by keeping detailed records, setting aside money consistently, and using available tools or expert help.