One Of My Goals For 2026 Is To Start a Small Business. How Much Will I Be Taxed?

Tax Responsibilities for Self-Employed Individuals - Self-employed individuals are responsible for paying taxes that would typically be handled by an employer, including Social Security and Medicare taxes [2][3] - The IRS mandates that once self-employment income exceeds $400, individuals must pay a self-employment tax of 15.3% on their net earnings, which is divided into 12.4% for Social Security and 2.9% for Medicare [4][6] - The taxable amount is calculated on 92.35% of the profit, providing a slight reduction in the taxable base [4] Tax Calculation and Deductions - In addition to self-employment tax, self-employed individuals are also liable for regular income tax, which can lead to a significant overall tax burden [5] - A deduction of half of the self-employment tax is allowed when calculating income tax, which can alleviate some of the financial impact [5] Payment Schedule and Penalties - Tax payments for self-employed individuals are due quarterly, and failure to make these payments can result in penalties from the IRS [6]