Self-Employment Tax Calculator (US)

Self-Employment Tax (US)

When you work for an employer, they pay half of your Social Security and Medicare taxes. When you are self-employed, you pay both halves, and that is the self-employment tax.

The two-step calculation:

Step 1: Multiply net self-employment income by 92.35%

• This 7.65% reduction accounts for the deductible employer-equivalent portion

Step 2: Apply the SE tax rate to that adjusted amount

SE Tax = Net SE Income × 0.9235 × 15.3%

The 15.3% breaks down as:

• 12.4%: Social Security (on the first $184,500 of wages plus SE income in 2026)
• 2.9%: Medicare (on all SE income)
• +0.9%: Additional Medicare on income above $200,000 (single) or $250,000 (MFJ)

Deduction benefit: You can deduct half of your SE tax from your gross income on Schedule 1, Form 1040. This reduces your regular income tax (but not SE tax itself).

Deductible amount = SE Tax ÷ 2

Example:

• Freelance income: $60,000
• Adjusted: 60,000 × 0.9235 = $55,410
• SE Tax: 55,410 × 0.153 = $8,478
• Deductible half: $4,239 (reduces taxable income for regular income tax)

Where the wage base changes everything. Social Security stops at $184,500 of combined wages and self-employment income. Below it, every extra dollar of profit costs 15.3 cents. Above it, the same dollar costs 2.9 cents, rising to 3.8 once the Additional Medicare tax starts. That is a fivefold drop at a single threshold, and it is why the W-2 wages box on this page matters: a salary uses up the base first, leaving less of it for your self-employment income.

The 0.9% is not deductible. Half of the ordinary self-employment tax comes off your income on Schedule 1, but the Additional Medicare tax is settled separately on Form 8959 and none of it is deductible. Splitting them apart is easy to get wrong and it is worth a few hundred dollars at higher incomes.

Quarterly estimated payments: The IRS wants this paid as you earn it, not in April. You owe quarterly payments if you expect to be more than $1,000 short after withholding.

Approximate quarterly payment = (SE tax + estimated income tax) ÷ 4

The figure on this page is only the first half of that. Income tax on the same profit is additional, and both go into the same payment.

Who pays it:

• Freelancers and independent contractors
• Sole proprietors
• Partners in a partnership, on their share of the profit
• Single-member LLC owners and other pass-through members
• Anyone with net self-employment income of $400 or more, a threshold set in 1990 and never indexed

Who does not, and the reason people form S-corporations. An S-corporation owner pays themselves a salary, which carries payroll tax, and takes the rest as a distribution, which does not. The savings are real once profit is comfortably into six figures, and they come with a payroll service, a separate return, and an IRS expectation that the salary is genuinely reasonable for the work. Setting it at $20,000 on $200,000 of profit is the classic way to lose that argument.

The other side of the bill. Self-employment tax is not pure cost. It buys Social Security and Medicare credits at the same rate an employee earns them, and you need 40 quarters to qualify at all. Structuring income to avoid it also shrinks the benefit you eventually collect, which is a trade rather than a saving.