Freelance vs Full-Time Compared

What the data says about independent contractors (US)
Income

Freelancing and full-time employment trade off different things. As an employee, you get a set salary, and your employer runs payroll, withholds tax and may offer benefits. As a freelancer, you set your own clients, rates and hours, but you handle your own taxes, benefits, sales and admin, and your income can change from month to month. Neither is right for everyone. This page sets out the differences so you can weigh them against your own situation.

Billed publishes this page. The figures below are quoted from the US Bureau of Labor Statistics (BLS) and the IRS, opened on October 29, 2026. The tax rules are US rules. This is general information, not tax, legal or career advice; ask your accountant how the rules apply to you.

What the data says about independent contractors (US)

The BLS release Contingent and Alternative Employment Arrangements, July 2023, published November 8, 2024, counts freelancers as independent contractors. It says "Independent contractors (including independent consultants and freelance workers) were the largest of the four alternative work arrangements." It reports:

Number: "In July 2023, 11.9 million people were independent contractors on their sole or main job, representing 7.4 percent of total employment."
Earnings: "In July 2023, median weekly earnings on the sole or main job were higher for full-time workers in traditional arrangements ($1,132) and on-call workers ($1,125) than for independent contractors ($949) and temporary help agency workers ($818)." BLS adds that these differences "reflect, in part, variations in the occupational distributions and the demographic characteristics of the workers," so they don't tell you what you would earn either way.
Health insurance: "In July 2023, 84.9 percent of workers in traditional arrangements had health insurance from any source, a larger share than workers employed by contract companies (79.4 percent), on-call workers (78.2 percent), and independent contractors (74.2 percent)."
Preference: "As in prior surveys, independent contractors overwhelmingly preferred their work arrangement (80.3 percent), whereas 8.3 percent would prefer a traditional work arrangement."

These are survey results for groups of workers. They describe the people who chose each arrangement, not what would happen if you switched.

Income

Full-time: a set salary or wage, paid on a schedule. Raises, bonuses and job changes affect it, and so does the risk of being laid off.
Freelance: income depends on the clients you win, the rates you set and when clients pay. Months can differ a lot, so a cash buffer for quiet months helps. Losing one large client can cut income sharply, so a pipeline of future work matters.

To compare offers, work out what an hour of freelance work has to bring in after your costs and unbilled hours, with the hourly rate calculator.

Benefits

Full-time: depending on the employer, a job may come with health insurance, a retirement plan, paid time off and training. Check each offer for what's included.
Freelance: you choose and pay for your own health insurance and retirement savings, and time off is unpaid unless your rates cover it.

When you compare, put the value of the benefits in an offer next to what you would pay to replace them yourself.

Taxes (US)

One tax difference is who pays social security and Medicare tax, and how much.

Employees: IRS Publication 15 (2026), the employer's tax guide, says "The rate of social security tax on taxable wages is 6.2% each for the employer and employee." It also says "The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2025." Your employer withholds your share from your pay and pays its own share on top. For 2026, "The social security wage base limit is $184,500."
Freelancers: the IRS page Self-employment tax (Social Security and Medicare taxes), last reviewed or updated June 27, 2026, says "The self-employment tax rate is 15.3%." and "The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance)." You pay it yourself, on top of income tax. You must pay it and file Schedule SE if "Your net earnings from self-employment (excluding church employee income) were $400 or more."
The deduction: the same IRS page says "You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income." and "Wage earners cannot deduct Social Security and Medicare taxes."

Freelancers also have no employer withholding, so they may need to pay estimated tax during the year. See freelance taxes: the complete guide.

Worked example (US): social security and Medicare tax on $60,000

The person and figures here are a sample, invented for this example. They compare only social security and Medicare tax, not income tax, benefits or business costs. The amounts are below the social security wage base.

As an employee earning a $60,000 salary:

Social security: $60,000 × 6.2% = $3,720.
Medicare: $60,000 × 1.45% = $870.
Employee's share: $3,720 + $870 = $4,590, withheld from pay. The employer pays another $4,590 on top.

As a freelancer with $60,000 of net earnings from self-employment (profit after business expenses):

The 2025 Schedule SE says to "multiply line 3 by 92.35% (0.9235)": $60,000 × 0.9235 = $55,410.
Social security part: $55,410 × 12.4% = $6,870.84.
Medicare part: $55,410 × 2.9% = $1,606.89.
Self-employment tax: $6,870.84 + $1,606.89 = $8,477.73.
Schedule SE line 13, "Deduction for one-half of self-employment tax," says to "Multiply line 12 by 50% (0.50)": $8,477.73 × 50% = $4,238.87, which you deduct in figuring adjusted gross income.

So on the same $60,000, this person pays $8,477.73 − $4,590 = $3,887.73 more in these two taxes as a freelancer, before the deduction is counted. The two $60,000 figures aren't the same thing, though: an employer also pays its $4,590 share and may pay for benefits, while a freelancer's net earnings are what's left after business expenses. Ask your accountant to run the numbers for your situation.

Control and day-to-day work

Full-time: your employer sets your role, team and priorities, and may set your hours and location. You get colleagues, a manager and internal routes to promotion.
Freelance: you choose your clients, projects, tools and hours, within deadlines you agree to. You also do the sales, contracts, invoicing and collections, and a difficult client can be as hard to work with as a difficult manager.

Learning and career growth

Full-time: managers, peers and internal training can give you regular feedback.
Freelance: feedback comes from clients, peers and courses you find yourself, so build that into your plans.

Admin and running the business

Freelancing adds admin: proposals, contracts, invoices, chasing payments, recording expenses and keeping records for tax. Billed's invoice software page says "Invoice reports show which invoices are paid, partially paid or past due, and you can see who owes you money and send them a payment reminder." Its expense and receipt tracking page says to "Give every expense a category so your spending is already sorted when you file taxes or hand the year to your accountant." If you bill by the hour, its timesheets and time tracking page says you can "Log time for each task as you work, and see how much time goes into each project." Plans are on Billed's pricing page, and calculators are in the tools section.

Questions to ask yourself

For how long could your savings cover your expenses if work went quiet?
Do you have health insurance and retirement savings arranged without an employer?
Do you enjoy finding clients and negotiating, or would you rather someone else did?
Do you want a manager and team around you at this stage of your career?
Does your employment contract allow side work, if you want to try freelancing first?

If you decide to try it, see how to start freelancing and how to transition from employee to freelancer. More guides are in the freelancing hub.

When this guide isn't for you

This page compares solo freelancing with a single full-time job in the US. If you work outside the US, run a firm with employees, or work through an agency or staffing firm, the rules and tradeoffs will differ.

Frequently Asked Questions

Is freelancing better than a full-time job?

Neither is better for everyone. Freelancing gives you more control over clients and hours, and full-time work gives you a set salary and, depending on the employer, benefits. Compare the whole package for your situation, including taxes, benefits and the admin you would take on.

How much more tax do freelancers pay in the US?

Freelancers pay self-employment tax, which the IRS says is 15.3%, made up of 12.4% for social security and 2.9% for Medicare. Employees pay 6.2% and 1.45% of their wages, and their employer pays the same again. In the sample on this page, $60,000 of net self-employment earnings gives $8,477.73 of self-employment tax, against $4,590 withheld from a $60,000 salary. Freelancers can deduct half of their self-employment tax in figuring adjusted gross income. Ask your accountant how this applies to you.

What share of US workers are independent contractors?

The BLS reported: "In July 2023, 11.9 million people were independent contractors on their sole or main job, representing 7.4 percent of total employment." BLS includes independent consultants and freelance workers in that group.

Do independent contractors earn less than employees?

BLS reported median weekly earnings in July 2023 of $949 for full-time independent contractors and $1,132 for full-time employees in traditional work arrangements. BLS says the differences reflect, in part, the jobs and characteristics of the workers in each group, so the figures don't predict what you would earn.

Can I freelance while working a full-time job?

Check your employment contract first for rules on side work, conflicts of interest and who owns what you create. If it's allowed, you can test freelancing with a small client before deciding whether to switch.

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Freelance vs Full-Time: Tradeoffs for Your Career