Self-employment tax is the Social Security and Medicare tax that self-employed people pay on their own business profit. For 2026 the rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare, figured on 92.35% of net earnings. You owe it, and file Schedule SE, when net earnings from self-employment are $400 or more. ProfitDrawer's free self-employed tax calculator shows this part on its own line.
Employees split these taxes with their employer. When you work for yourself, you pay both halves through self-employment tax.
Worked example (example numbers only): a $40,000 profit gives $40,000 x 92.35% = $36,940 of net earnings, and $36,940 x 15.3% = $5,651.82 of self-employment tax.
Points to know:
- You can deduct the employer-equivalent portion (half) of your self-employment tax when figuring adjusted gross income. This lowers income tax only, not the self-employment tax itself.
- The 12.4% Social Security part applies only up to a yearly earnings limit, so at high incomes the real total is lower than the full 15.3%.
- An additional 0.9% Medicare tax applies above $200,000 (single), $250,000 (married filing jointly) or $125,000 (married filing separately).
- Federal income tax, and any state income tax, comes on top of self-employment tax.
Self-employed people usually pay both taxes during the year through quarterly estimated payments. General information, not tax advice.
Source: IRS: Self-employment tax (Social Security and Medicare taxes) · Updated
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General information, not tax, legal or financial advice. Check the rules for your state and your situation.