CPAFIRE

Self-employment tax calculator

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TL;DR: Self-employment tax is 15.3% of 92.35% of your net self-employment profit: 12.4% for Social Security up to the 2026 wage base of $184,500 (reduced by any W-2 wages) and 2.9% for Medicare on everything. Half is deductible. High earners also owe 0.9% Additional Medicare Tax above $200,000 single or $250,000 joint. If net earnings are under $400, there is no SE tax.

Educational only, not tax, legal, or investment advice. Examples are illustrations, not predictions. Rules and limits change; verify current figures and talk to a qualified professional about your situation.

Congratulations on being your own boss. Your new boss is now responsible for both halves of Social Security and Medicare, which your old boss quietly paid half of. That's self-employment tax, and it surprises nearly every first-year freelancer because it applies even when income tax is low.

This calculator uses 2026 rules from IRS Topic 554 and the 2026 wage base from SSA ($192,300 for 2027, per SSA). Deeper dive: the self-employment tax guide.

CPA Warning Label: SE tax is on top of income tax, not instead of it. A side gig netting $20,000 can easily cost $2,800 in SE tax plus your full income tax rate, so set money aside from every payment.

How it works

  1. Multiply net profit by 92.35% to get net earnings from self-employment. This mirrors the employer half of payroll taxes that an employee never sees.
  2. Apply 12.4% Social Security tax up to $184,500 for 2026, minus any W-2 wages already taxed for Social Security.
  3. Apply 2.9% Medicare tax to all net earnings.
  4. Deduct half of the SE tax as an adjustment to income on Schedule 1.
  5. If net earnings plus wages exceed $200,000 single or $250,000 joint, add 0.9% Additional Medicare Tax on the excess (Topic 560).

The 92.35% step is why SE tax works out to about 14.1% of profit rather than a flat 15.3%. Under $400 of net earnings, no SE tax is due. Church employees and some other groups have special rules.

Illustration

Riley, single, freelances and nets $60,000 with no other job. Net earnings: $55,410. Social Security: $6,870.84. Medicare: $1,606.89. SE tax: $8,477.73, about 14.1% of profit. Half, about $4,239, is deductible, so income tax applies to $60,000 minus $4,239.87, minus the standard deduction of $16,100. Riley also might qualify for the QBI deduction.

Change one thing: Riley also has a $150,000 W-2 job. Then only $34,500 of SE earnings is left under the wage base for Social Security, and the SE tax drops to $5,884.89. Plug in your own numbers above.

Ways to lower it legally

  • Deduct every real business expense, since SE tax is on net profit. See the deductions in our self-employment guides.
  • Home office and vehicle: claim them if you qualify.
  • S corp election: at higher profits, salary-plus-distributions can reduce payroll tax; see the S corp savings calculator.
  • Hire your kids properly in a sole proprietorship: wages to a child under 18 aren't subject to Social Security and Medicare taxes.
  • Retirement and health insurance deductions lower income tax but not SE tax. Know which is which; see the self-employed health insurance deduction.

Rental income is generally not subject to SE tax, unless you provide substantial services; see self-rental rules for a related trap.

Common mistakes

  • Forgetting it entirely: first-year freelancers often set aside money for income tax only. Budget roughly 14% of profit for SE tax alone at most income levels, then add income tax.
  • Double-counting the wage base: if you have a W-2 job too, enter those wages. Software usually handles it, but only if you report Social Security wages correctly from box 3 of your W-2.
  • Treating 1099 income below $2,000 as tax-free: the 1099-NEC reporting threshold rose to $2,000 starting with 2026 payments, but the income is taxable and subject to SE tax regardless of whether you get a form.
  • Confusing the deductions: the half-SE-tax deduction, health insurance and SEP contributions reduce income tax only. Business expenses on Schedule C reduce both.
  • Ignoring spouses: if both spouses work in an unincorporated business, each may need a separate Schedule SE, which also builds each spouse's Social Security record.

Paying it

SE tax is reported on Schedule SE and paid with income tax. Since there's no withholding, most self-employed people make quarterly estimated payments. Use the estimated tax calculator for safe harbor amounts, or more calculators.

FAQ

Does self-employment tax count toward Social Security benefits?

Yes. The Social Security portion builds your earnings record and future benefits, the same way payroll taxes do for employees. That is one trade-off of strategies that lower SE tax.

What is the self-employment tax rate for 2026?

15.3% on 92.35% of net profit: 12.4% Social Security up to the $184,500 wage base and 2.9% Medicare with no cap, plus 0.9% Additional Medicare Tax above $200,000 single or $250,000 joint.

Is self-employment tax deductible?

Half of it is deductible as an adjustment to income. It reduces income tax, not the SE tax itself.

Do I pay SE tax if I also have a W-2 job?

Yes, on your self-employment earnings. But your W-2 wages count toward the Social Security wage base, so high earners may owe only the 2.9% Medicare part on some SE income.

Is there a minimum income for self-employment tax?

Yes. If net earnings from self-employment are under $400, no SE tax is due, though you may still need to file for income tax.

Sources & fact-check notes

Figures checked October 27, 2026. Rules and limits change; verify with the official source before acting.