Worked example
On $60,000 of profit, self-employment tax is worked out on 92.35% of it, $55,410. Social Security at 12.4% is $6,870.84 and Medicare at 2.9% is $1,606.89, so the total is $8,477.73. Half of it, $4,238.86, comes off your income before income tax is calculated.
What self-employment tax is
When you work for an employer, you pay 7.65% for Social Security and Medicare and your employer pays another 7.65%. When you work for yourself, you pay both halves. That is self-employment tax: 15.3% on most of your profit, reported on Schedule SE and added to your income tax.
It applies once your net earnings from self-employment reach $400 for the year. Unlike income tax, there is no standard deduction, so it starts from the first dollar above that line.
The 2026 rates
| Part | Rate | Applies to |
|---|---|---|
| Social Security | 12.4% | The first $184,500 of combined wages and SE earnings |
| Medicare | 2.9% | All SE earnings |
| Additional Medicare | 0.9% | Earnings over $200,000 single or head of household, $250,000 married filing jointly, $125,000 married filing separately |
Before any of these apply, your profit is multiplied by 92.35%. This mirrors the employer half of the tax, which an employee never pays tax on.
If you also have a job
Social Security stops at $184,500 of total earnings for 2026. If your W-2 wages already used part of that limit, less of your freelance profit is hit by the 12.4%. Enter your wages in the calculator to see the effect. Medicare has no limit.
Ways to lower it
- Claim every business expense. SE tax is charged on profit, so a $1,000 expense saves about $141 of SE tax before income tax savings.
- Use the mileage and home office deductions, which reduce profit on Schedule C.
- Consider an S corporation once profit is high. You pay yourself a reasonable salary and take the rest as distributions without SE tax, but payroll and extra filings cost money, so it rarely pays below about $50,000 to $80,000 of profit.
Retirement contributions and health insurance premiums lower your income tax but not your self-employment tax, because they are deducted after Schedule SE.
Common questions
Is self-employment tax the same as income tax?
No. Self-employment tax pays for Social Security and Medicare. You pay it on top of regular income tax, though half of it is deductible when working out income tax.
Why is it 15.3% and not 7.65%?
Employees split 15.3% with their employer. As your own employer you pay both halves.
Do I pay SE tax if I made under $400?
No. If your net earnings from self-employment, after the 92.35% step, are under $400, you owe no self-employment tax. You may still owe income tax.
Does SE tax go up with my tax bracket?
No. It is a flat 15.3% up to the Social Security wage base, then 2.9%, plus 0.9% at high incomes. Income tax is the part that rises with brackets.
Where do I pay it?
It is included in your Form 1040 balance and in your quarterly estimated payments. There is no separate payment.
Official sources: IRS: Self-employment tax, SSA: 2026 contribution and benefit base. This calculator gives estimates for planning, not tax advice. Read the disclaimer.