How to Calculate Self-Employment Tax (2026 Rates and Examples)

Self-employment (SE) tax is the Social Security and Medicare tax for people who work for themselves. To calculate it, multiply your net profit by 92.35%, then by 15.3%, with the Social Security part (12.4%) applying only up to the 2026 wage base of $184,500. On $60,000 of net profit, SE tax is $60,000 × 0.9235 × 0.153 = $8,477.73. Half of that, $4,238.87, is deductible when you figure your income tax.

The self-employment tax formula

• Net profit is your business income minus deductible business expenses, from Schedule C (or your share from a partnership on Schedule K-1).
• 0.9235 removes the equivalent of the employer’s half of FICA, so you are taxed on the same base an employee would be.
• 12.4% is Social Security (the 6.2% employee share plus 6.2% employer share).
• 2.9% is Medicare (1.45% + 1.45%).

You figure SE tax on Schedule SE and carry it to Form 1040. The self-employment tax calculator does the arithmetic.

Who pays self-employment tax

You generally owe SE tax if your net earnings from self-employment are $400 or more in a year and you work as:

• A sole proprietor or independent contractor, including freelancers paid on Form 1099-NEC or 1099-K
• A gig worker for ride-share, delivery or online platforms
• A single-member LLC owner taxed as a sole proprietorship
• A general partner, or a member of an LLC taxed as a partnership who is active in the business

Shareholders of an S corporation do not pay SE tax on their share of profit; instead, the company must pay them a reasonable salary subject to regular payroll taxes. Hobby income, interest, dividends and most rental income are not self-employment income.

Worked example: $60,000 of net profit

1. SE earnings: $60,000 × 0.9235 = $55,410.00
2. Social Security: $55,410 × 12.4% = $6,870.84
3. Medicare: $55,410 × 2.9% = $1,606.89
4. Total SE tax: $8,477.73
5. Deduction for half: $8,477.73 ÷ 2 = $4,238.87

The effective SE tax rate on profit is 0.9235 × 15.3% = 14.13%, slightly less than the headline 15.3%.

SE tax at different profit levels

At $200,000 of profit, SE earnings of $184,700 exceed the $184,500 wage base, so Social Security is capped at 12.4% × $184,500 = $22,878. Medicare has no cap. SE earnings above $200,000 (single) or $250,000 (married filing jointly), counting wages too, also owe the 0.9% Additional Medicare Tax, reported on Form 8959.

If you also have a W-2 job

Wages from a job count toward the Social Security wage base first. If you earn $100,000 in W-2 wages and have $100,000 of net profit from a side business:

• SE earnings: $100,000 × 0.9235 = $92,350
• Room left under the wage base: $184,500 − $100,000 = $84,500
• Social Security: 12.4% × $84,500 = $10,478.00
• Medicare: 2.9% × $92,350 = $2,678.15
• SE tax: $13,156.15, about $973 less than with no W-2 wages

How SE tax fits with income tax

SE tax is separate from income tax, but they interact in two ways:

1. The half-SE deduction reduces adjusted gross income (AGI), and so income tax. It does not reduce SE tax itself.
2. The qualified business income (QBI) deduction lets many sole proprietors deduct up to 20% of qualified business income for income tax purposes. It also does not reduce SE tax.

A simplified full picture for a single filer with $60,000 of profit and no other income in 2026:

That is about 20% of profit, or roughly $3,009 per quarterly payment. For how the brackets work, see marginal vs. effective tax rate, and to run your own scenario, try the income tax calculator.

Paying SE tax: quarterly estimates

No employer withholds tax from self-employment income, so the IRS expects quarterly estimated payments if you will owe $1,000 or more for the year. For 2026 the due dates are:

To avoid an underpayment penalty, pay at least the smaller of 90% of this year’s tax or 100% of last year’s tax (110% if last year’s AGI was over $150,000), spread across the four dates. If you also have a W-2 job, raising withholding on your Form W-4 can cover the self-employment tax instead.

Ways to legally lower SE tax

• Track every deductible business expense. SE tax is based on net profit, so each legitimate expense lowers it by about 14 cents per dollar, plus income tax.
• Home office, vehicle and equipment deductions reduce profit if you qualify under IRS rules.
• Retirement contributions such as a SEP IRA or solo 401(k) reduce income tax, though not SE tax, for a sole proprietor.
• An S corporation election can reduce SE-type taxes for profitable businesses by splitting income between a reasonable salary and distributions, but it adds payroll costs and IRS scrutiny of the salary level. Get professional advice first.

Pricing your work with SE tax in mind

Because you pay both halves of FICA and fund your own benefits, a freelance rate must be well above an employee’s hourly wage to produce the same take-home pay. The guide on how to convert salary to hourly shows the comparison, and the freelance rate calculator builds a rate from your target income, expenses and billable hours.

This guide is general information using 2026 IRS and SSA figures. It is not tax advice; your situation may involve credits, other income or state taxes. Consult the IRS Schedule SE instructions or a tax professional.