Self-employment can take many forms. Some people run small online shops. Others offer professional services or work as independent contractors. Together, they make up a significant portion of the U.S. workforce.
As of May 2025, around 16.8 million Americans were self-employed. That’s about 10.3 percent of the total workforce. This figure includes roughly 6.7 million incorporated business owners and 10.2 million unincorporated individuals.
These workers often manage their own taxes, find their own clients, and adapt to income that can vary month to month.
In this article, we’ll look at where they’re most active, which industries they work in, and how much they typically earn. The data offers a current snapshot of the self-employed population in 2025.
📌 Also Read: Small Business Tax Rates 2025: How Much Tax Does My Business Need To Pay?
What It Means to Be Self-Employed in 2025
Being self-employed means you earn income outside of a traditional job. You don’t receive a W-2 from an employer. Instead, you run your own business or work independently, often offering services to multiple clients. This includes everything from freelance writers and graphic designers to real estate agents and small business owners.
The IRS and labor agencies generally use three main criteria to describe self-employment:
✅ You make key business decisions: You decide your own hours, set your rates, and choose which clients or projects to take on.
✅ You report income differently for taxes: If you’re a sole proprietor, you typically report earnings using Schedule C (Form 1040). If you’re part of a partnership, your share of income is reported on a Schedule K-1 (Form 1065).
✅ You pay self-employment tax: Self-employed individuals are responsible for both the employer and employee portions of Social Security and Medicare taxes. These are reported using Schedule SE.
These guidelines are consistent with how the IRS and Bureau of Labor Statistics (BLS) define independent workers and small business owners.
Self-Employment Rate and Total Workers
As of May 2025, an estimated 16.85 million Americans were self-employed. That includes:
✅ 6.7 million incorporated self-employed individuals (those who have registered their businesses as corporations)
✅ 10.2 million unincorporated self-employed individuals (such as freelancers, gig workers, or sole proprietors)
Together, this group accounts for roughly 10.3 percent of all employed individuals in the U.S. civilian labor force, which totaled approximately 163.4 million people.
These figures help show how common self-employment is, not just among business owners with formal entities, but also among those working independently without incorporation.
Where the Data Comes From
The self-employment numbers in this report are based on the Current Population Survey (CPS), a monthly survey conducted by the U.S. Census Bureau on behalf of the Bureau of Labor Statistics (BLS).
✅ Who’s surveyed: Households across all 50 states and the District of Columbia
✅ Who’s counted: Individuals age 16 and older who report their primary employment status
✅ Where results are published: The data appears in the BLS’s monthly Employment Situation report, specifically in Table A-9.
📌 For more on how the data is collected, see the CPS technical documentation on the BLS website.
Self-Employment by Industry, Income, and State
Self-employment looks different across industries, income levels, and geographic regions. Let’s take a look at where self-employed workers are most concentrated, how much they typically earn, and which states have the highest rates.
Top Industries for Self-Employed Workers
The Nonemployer Statistics (NES) from the U.S. Census Bureau tracks businesses that have no paid employees. These are often run by sole proprietors or single-member LLCs and are widely used to estimate the unincorporated self-employed population.
In the most recent NES data covering 2023, the industries with the highest number of nonemployer businesses are as follows:
Top Industries for Self-Employed Workers (2023)
| Industry | NAICS | Number of Self-Employed Workers |
| Professional, Scientific, and Technical Services | 54 | 4,075,717 |
| Other Services (except Public Administration) | 81 | 3,206,392 |
| Real Estate and Rental and Leasing | 53 | 3,170,531 |
| Construction | 23 | 2,917,631 |
| Health Care and Social Assistance | 62 | 2,303,883 |
Source: United States Census Bureau
Note: The NAICS code (North American Industry Classification System) is a standardized 2–6 digit code used by the U.S. government to classify businesses by industry. In this table, the 2-digit NAICS code groups similar sectors. For example, 54 represents professional services, while 23 covers construction.
These industries tend to attract workers who can operate independently and don’t require a team or large infrastructure to get started. The data offers a glimpse of where non-employee businesses are most common.
How Much Self-Employed People Earn
Earnings for self-employed individuals depend heavily on business type, industry, and whether the business is incorporated.
✅ Incorporated business owners reported roughly $101.6 billion in nonfarm income in the Professional, Scientific, and Technical Services sector alone in 2022. These figures are typically filed on Schedule C with a corporate election.
✅ Unincorporated sole proprietors, who also file using Schedule C, earned a combined $410.7 billion in net income across all nonfarm industries. That averages to about $13,250 per return, based on 31 million filings.
✅ There’s wide variation by sector. For example, Professional, Scientific, and Technical Services made up nearly 25 percent of all sole proprietor profits. By contrast, sectors like Agriculture and Mining accounted for less than 6 percent.
These averages reflect net income after business deductions and don’t include other types of household income. In many cases, self-employed individuals may also have additional income sources or tax considerations.
📌 Source: IRS | Sole Proprietorship Returns, Tax Year 2022
States With the Most (and Least) Self-Employed
Self-employment rates vary significantly by state. Rural states often show higher percentages, while urban states rely more on traditional wage jobs.
Based on 2023 American Community Survey (ACS) data, here are the states with the highest (and lowest) share of self-employed workers:
States With the Highest Self-Employment Rates
✅ Hawaii – 10.5%
Tourism drives much of Hawaii’s economy. Many services, like surf lessons, boat tours, or short-term rentals, are run independently. Nearly half of all jobs in the state are in small businesses, well above the national average. This creates a natural pull toward self-employment.
✅ Alaska – 10.2%
Remote geography and seasonal industries like fishing, guiding, and bush aviation make traditional payroll jobs less common. In many rural areas, self-employment isn’t just an option, it’s the default. Men make up more than 60 percent of the state’s self-employed workforce.
✅ West Virginia – 9.0%
With slow wage growth and a long history of contractor-based work in coal and energy, many West Virginians create their own jobs. Economic projections show limited payroll expansion, so more residents are turning to micro-businesses.
✅ Delaware – 8.9%
Delaware’s business-friendly laws attract tens of thousands of single-member LLCs. Between 2021 and 2023, nearly 300,000 new business entities were formed — many of them by solo entrepreneurs.
✅ New Mexico – 8.7%
New Mexico’s strong creative economy and active outdoor scene support a contractor-heavy workforce. Artists, tour guides, and freelancers make up a large share of local business activity.
States With the Lowest Self-Employment Rates
✅ Florida – 3.1%
Florida’s massive workforce includes many tourism jobs, but most are W-2 positions with large hospitality employers. Even though over 220,000 people are self-employed, that’s a small percentage of the state’s 7.4 million workers.
✅ Ohio – 3.3%
Ohio still depends on large-scale manufacturing and corporate employers. It ranks high in industrial payroll jobs, which typically offer more stable wages than freelance work.
✅ New Hampshire – 3.5%
High wages in fields like healthcare and tech make traditional jobs more attractive. With a median hourly rate of $31.45, many residents stay on payroll rather than striking out on their own.
✅ Pennsylvania – 3.5%
The state’s job market is diverse but dominated by big institutions—hospitals, universities, logistics companies—so most workers are employees. Out of 4.5 million employed residents, only 157,000 are self-employed.
✅ Indiana – 3.5%
Indiana has the highest concentration of manufacturing jobs in the U.S.—double the national average. This strong factory presence means fewer workers are branching into freelance or contractor roles.
📝 Quick Note — How State Self-Employment Rates Were Calculated
To find the self-employment share for each state, we used two values from the 2023 American Community Survey (ACS) Table S2409:
- Total employed residents (age 16+) → S2409_C01_001E
- Total self-employed residents (incorporated + unincorporated) → S2409_C01_007E
Then we applied this simple formula:
Self-employment rate = (Self-employed / Total employed) x 100
✏️ Example (North Dakota):
- Self-employed = 16,932
- Total employed = 124,758
- Rate = 16,932 ÷ 124,758 ≈ 13.6%
📌 To view the raw data, use this Census API link:
https://api.census.gov/data/2023/acs/acs5/subject?get=NAME,S2409_C01_001E,S2409_C01_007E&for=state:*
The JSON output lists every state. Just divide the two columns to get the percentages shown above.
Trends and What’s Ahead
Self-employed workers play a key role in the economy, even as they face common hurdles like limited access to capital, complex tax rules, and fewer benefits. Though many run small or solo operations, their collective impact remains significant, shaping job growth, innovation, and economic output across the country.
How Self-Employment Impacts the U.S. Economy
Self-employed workers, including nearly 28.5 million non-employer businesses, contribute significantly to the national economy. Small businesses now account for approximately 43.5 percent of U.S. GDP and employ 45.9 percent of all private-sector workers.
From 1995 to 2023, small businesses generated 61 percent of all net new jobs in the U.S., showing that even solo operators have a meaningful impact on overall employment.
What’s Fueling Growth (and What’s Holding It Back)
Key growth drivers:
✅ Remote work and digital tools
Online platforms, freelance marketplaces, and cloud software have made it easier and cheaper to start a business.
✅ Occupational trends
The Bureau of Labor Statistics expects strong demand in fields where many workers are already self-employed—such as interpreters, taxi drivers, and animal trainers. Many of these roles are growing faster than the national average of 3 percent.
✅ Startup surge
Since 1997, the number of non-employer businesses has grown by 84 percent, far outpacing population growth.
Ongoing challenges:
❌ Access to capital
Higher interest rates and stricter lending standards continue to make it difficult for sole proprietors to borrow or grow.
❌ Hiring and supply delays
In 2022, 40 percent of small firms struggled to find workers, while 24 percent reported supply chain issues.
❌ Lack of benefits and tax complexity
Many self-employed individuals face high costs for health insurance and must manage quarterly tax filings on their own.
Government Programs That Offer Support
✅ SBA Microloan
Offers up to $50,000 (average loan: $13,000) through local nonprofit lenders. Funds may be used for inventory, working capital, or equipment.
✅ SBA 7(a) Loan
Provides up to $5 million in financing, with the SBA guaranteeing 75–85 percent of the loan to encourage bank lending.
✅ Free Business Counseling
Support is available from networks like Small Business Development Centers (SBDCs), SCORE mentors, and Women’s Business Centers. Services include business planning and funding advice.
What Might Shift in 2026 and Beyond
✅ Job growth will be uneven
The economy is projected to add 6.7 million jobs by 2033, but many of the fastest-growing roles, such as personal service providers, pet care specialists, and independent tech consultants, are typically done as solo ventures.
✅ AI may lower startup costs
Freelancers and solo entrepreneurs are already using AI tools for design, coding, and administrative work, helping reduce costs and expand capacity without hiring.
✅ Policy changes may redefine self-employment
Upcoming changes to worker classification rules and 1099-K tax reporting thresholds could affect how gig workers and freelancers report income and qualify for business deductions.
✅ New funding programs are being tested
The SBA is piloting a new Working Capital Program under the 7(a) loan umbrella and expanding its microlender network. The goal is to close funding gaps for very small firms. Adoption trends will show whether credit access is improving.
Key Takeaways: What the Numbers Tell Us About Self-Employment in 2025
Self-employment continues to be a major part of the U.S. labor market—shaped by technology, policy shifts, and changing worker preferences. From freelancers in urban hubs to independent operators in rural states, the landscape remains diverse and dynamic.
The data suggests that while self-employment offers flexibility and autonomy, it also comes with real trade-offs, such as income volatility, limited benefits, and tax complexity. Growth in sectors like tech, creative services, and remote consulting points to expanding opportunities, but long-term success may depend on better access to support, financing, and policy clarity.
As more people consider working for themselves, understanding the patterns behind where, how, and why self-employment thrives can help guide smarter decisions — for individuals, businesses, and policymakers alike.
📌 Explore related topics in our other articles to dive deeper into income trends, business structures, and retirement options for the self-employed:
Disclaimer:
The Carry Learning Center is operated by The Vibes Company Inc. (“Vibes”) and contains generalized educational content about personal finance topics. While Vibes provides educational content and technology services, all investment advisory services discussed on this website are provided exclusively through its wholly-owned subsidiary, Carry Advisors LLC (“Carry Advisors”), an SEC registered investment adviser. The information contained on the Carry Learning Center should not be construed as personalized investment advice and should not be considered as a solicitation to buy or sell any security or engage in a particular investment, accounting, tax or legal strategy. Vibes is not providing tax, legal, accounting, or investment advice. You should consult with qualified tax, legal, accounting, and investment professionals regarding your specific situation.
The accounts, strategies and/or investments discussed in this material may not be suitable for all investors. All investments involve the risk of loss, and past performance does not guarantee future results. Investment growth or profit is never a guarantee. All statements and opinions included on the Carry Learning Center are intended to be current as of the date of publication but are subject to change without notice.
To access investment advisory services through Carry Advisors, you must be a client of Vibes on an eligible membership plan. For more information about Carry Advisors’ investment advisory services, please see our Form ADV Part 2A brochure and Form CRS or through the SEC’s website at www.adviserinfo.sec.gov.