Self-employed

Self-Employment Tax Explained: 2026 Rates and Examples

Updated September 30, 2026

Self-employment tax is how you pay Social Security and Medicare when you work for yourself. The rate is 15.3%, applied to 92.35% of your net earnings, and you can deduct half of it when figuring your adjusted gross income.

What self-employment tax actually is

When you have a job, your employer takes Social Security and Medicare tax out of your check and pays a matching share. When you work for yourself, you are both sides. Self-employment tax is that combined amount.

It is separate from income tax. You can owe it even when your income tax is low. This surprises many first-year freelancers, gig workers, and side-hustlers.

Nobody sends you a bill for it during the year. It simply shows up on your return, on a form called Schedule SE. That is why a first-year business owner can end up owing a lot more than expected in the spring.

The rate structure

The IRS says the self-employment tax rate is 15.3%. It has two parts:

12.4% for Social Security
2.9% for Medicare

The IRS also says that generally the amount subject to self-employment tax is 92.35% of your net earnings from self-employment. So 15.3% is not applied to your full profit.

Social Security tax applies only up to a yearly earnings limit, which is set by the Social Security Administration and changes every year. Medicare tax has no limit. High earners may also owe an additional 0.9% Medicare tax once income passes a threshold that depends on filing status. The examples below stay under the Social Security limit to keep the math simple.

The 92.35% figure exists because a regular employer pays half of these taxes and deducts that half as a business cost. The rules give you a similar break by only taxing most of your net earnings. That is an easy detail to miss when you try to estimate the tax in your head.

Get a quote for your self-employed return

A real preparer reviews and signs your return. You see the written quote before we start.

Get my quote

Who has to pay it

The IRS says you usually must pay self-employment tax if you had net earnings from self-employment of $400 or more. That includes sole proprietors, independent contractors, gig workers, and members of many partnerships. Net earnings means what is left after business expenses, so tracking your costs matters. See our side hustle tax guide if this is a second income.

If you also have a job, the wages and the business profit are treated separately for this tax, so your business income is not reduced by what you earned at work.

How it is figured on Schedule SE

Self-employment tax is computed on Schedule SE, which attaches to your Form 1040. The steps are simple:

Start with net profit from Schedule C.
Multiply by 92.35%.
Multiply the result by 15.3%.
Deduct one half of that tax on your Form 1040 when figuring adjusted gross income.

The half deduction lowers your income tax, but it does not lower the self-employment tax itself. To see where net profit comes from, read our Schedule C explainer.

The optional methods the IRS mentions on its site can apply when income is low or you had a loss, but they are situational. If you think one may fit you, tell your preparer early so the return can be built around it.

Three examples with round numbers

These are examples only, computed for illustration. They are not your numbers and not a quote. They assume all income is from self-employment and stays under the Social Security limit.

Net profit of $30,000: 92.35% is $27,705. At 15.3%, the tax is about $4,239. Half, about $2,119, is deductible.
Net profit of $60,000: 92.35% is $55,410. At 15.3%, the tax is about $8,478. Half, about $4,239, is deductible.
Net profit of $100,000: 92.35% is $92,350. At 15.3%, the tax is about $14,130. Half, about $7,065, is deductible.

Notice that a $1 rise in profit adds roughly 14 cents of self-employment tax in these ranges, on top of income tax. That is why setting money aside matters.

Your income tax is on top of these amounts, and it depends on your other income, filing status, deductions and credits. So do not treat the example tax as your total tax. It is one piece.

Planning for it during the year

No one withholds this tax for you, so you generally pay it through estimated payments. The IRS says people expecting to owe $1,000 or more when they file generally need to make them. Our guide to quarterly estimated taxes shows how. A simple habit helps: move a share of each payment you receive into a separate savings account.

What to gather for your return: a profit and loss summary, all 1099 forms you received, records of business expenses, and proof of estimated payments you made.

If you are still unsure how much to save, a rough share of each payment is a decent start, and you can adjust it after your first estimated payment. Our self-employed page explains how we prepare these returns.

Ways to keep the bill smaller, legally

You cannot skip this tax, but you can make sure you only pay it on what you truly earned.

Track every real business expense. Lower net profit means lower self-employment tax and lower income tax.
Keep the half deduction in mind so it is not missed on your Form 1040.
Do not mix personal purchases into business records. It weakens your whole file.
Keep mileage and home office records if those apply to you.

If your income is a mix of wages and side income, remember that wages already had Social Security and Medicare withheld, and this tax applies to the self-employed part. Bring both to your preparer so the return reflects the whole picture.

FAQ

Is self-employment tax the same as income tax?

No. Self-employment tax pays for Social Security and Medicare. Income tax is figured separately on your taxable income. You can owe both.

Can I deduct self-employment tax?

You can deduct one half of it. The IRS says this deduction is taken when figuring adjusted gross income on your Form 1040.

Do I owe it if I make less than $400?

The IRS says you usually must pay if your net earnings from self-employment were $400 or more. Below that, the usual requirement does not apply, though other rules can matter.

Does being an LLC change the tax?

Not by default. A one-owner LLC is normally treated as part of your personal return, so self-employment tax generally still applies to its net earnings.

Sources

Keep reading

Serving Longwood, Seminole County and clients in all 50 states remotely. See where we work.

General information, not tax advice for your specific situation. Rules can change, and a human preparer reviews your facts before any return is filed. Zero Fuss Taxes is a PTIN-holding tax preparation firm. We are not a CPA firm, enrolled agents or attorneys.

Start My Tax Return Call 689-331-5723