Self-employment tax is 15.3% of 92.35% of your net profit: 12.4% for Social Security capped at $184,500 of 2026 earnings, 2.9% for Medicare with no cap, and 0.9% more above $200,000 single or $250,000 joint. On $90,000 of net profit that's $12,717, and half of it ($6,358) comes back as a deduction.
Every wage earner in the country pays 15.3% of their wages toward Social Security and Medicare. Employees see 7.65% on their paystub and never notice the other half, because the employer sends it directly. When you freelance, drive for a gig app, or run a side business, there's no employer. You are both parties. Schedule SE is the IRS form that collects both halves from you, and it applies once your net earnings from self-employment hit $400 for the year.
The components haven't changed in years: 12.4% for Old-Age, Survivors and Disability Insurance (Social Security) and 2.9% for Medicare (hospital insurance). What changes annually is the Social Security wage base, which is $184,500 for 2026, up from $176,100 in 2025 and $168,600 in 2024.
This is the part that trips everyone up, and it's actually the fairest step. An employee never pays FICA on the employer's share of the tax, so Schedule SE taxes only 92.35% of your net profit (1 minus 7.65%) to put the self-employed in the same position. Concretely: $90,000 of Schedule C profit becomes 90,000 × 0.9235 = $83,115 of "net earnings from self-employment," and all the rates apply to that figure, not the raw profit.
Part one, Social Security, 12.4%. This applies to net earnings only up to the annual wage base, $184,500 in 2026. If you also have a W-2 job, your wages consume the cap first; a day job paying $150,000 leaves only $34,500 of your SE earnings subject to the 12.4% piece. The largest Social Security component anyone can owe for 2026 is 12.4% × 184,500 = $22,878.
Part two, Medicare, 2.9%, forever. No cap, no ceiling. Every dollar of net earnings above the wage base still pays 2.9%.
Part three, the additional Medicare tax, 0.9%. Above $200,000 single or $250,000 married filing jointly, the excess pays 0.9% more. Unlike the other pieces this one has no employer match in the W-2 world, which is why it's "additional" and not part of the 15.3% headline number. W-2 wages count toward the threshold first.
| Net profit (single, no W-2) | Net earnings | SE tax total | Effective rate on profit |
|---|---|---|---|
| $30,000 | $27,705 | $4,239 | 14.13% |
| $90,000 | $83,115 | $12,717 | 14.13% |
| $150,000 | $138,525 | $21,194 | 14.13% |
| $250,000 | $230,875 | $29,851 | 11.94% |
Notice the pattern: under the wage base, SE tax is a flat 14.13% of profit (15.3% × 0.9235). Past it, extra dollars only carry 3.8% (2.9% + 0.9%), so the blended rate slides down. High earners often assume SE tax hits harder as they grow; past $184,500 it actually hits softer per dollar.
Since employees never pay income tax on their employer's FICA share, the code extends the same deal to you: half of your SE tax is deductible, and not as an itemized deduction. It's an adjustment to income on Schedule 1, so you claim it even with the standard deduction.
On the $90,000 example, SE tax of $12,717 produces a $6,358 deduction. That lowers AGI, which then flows into your income tax calculation, and it matters for things like IRA phase-outs too. It doesn't reduce the SE tax itself, but at a 22% marginal rate that deduction saves about $1,399 of income tax.
Enter your net profit, any W-2 wages, and filing status. The calculator applies the wage base, the surtax, and the half deduction for you.
Self-Employment Tax Calculator →No, and conflating the two causes real panic in April. SE tax is a separate stack that exists alongside income tax, which is computed on (net profit − half of SE tax − the standard deduction: $16,100 single, $32,200 joint) using the regular brackets. A single freelancer with $90,000 of profit owes the $12,717 of SE tax plus roughly $9,571 of income tax, about $22,288 total. Our income tax calculator shows the bracket side of that stack.
Through estimated quarterly taxes, typically. There's no employer withholding from a 1099, so the IRS expects four payments a year: April 15, June 15, September 15, and January 15. Pay at least 90% of the current year's tax or 100% of last year's (110% if prior-year AGI topped $150,000) and you dodge the underpayment penalty, which runs at an interest rate recently in the 7–8% range and compounds daily. If you're setting up those payments, the quarterly tax calculator works through the safe harbor math with you.
Three legitimate levers. First, deductions: every ordinary business expense on Schedule C, from mileage to software to the home-office allocation, cuts net profit, and SE tax follows it down dollar for dollar; a $1,000 deduction saves $153 of SE tax plus income tax on top. Second, retirement plans: a SEP-IRA or Solo 401(k) contribution doesn't reduce SE tax itself (the base is net profit before contributions), but it cuts income tax sharply, softening the combined blow.
Third, the S-corp election, the big one. An S-corp owner pays themselves a reasonable salary, which carries payroll tax, and takes the rest as distributions, which don't. Past roughly $60,000 to $80,000 of profit the savings can outweigh the added payroll and filing costs, but "reasonable compensation" is an IRS hot button, so price it out with a CPA first.
⚖️ Not tax advice. This guide explains federal formulas as published for 2026; it isn't a substitute for a CPA who can see your actual books. State rules add their own layers.
It's the freelancer's version of FICA: 12.4% for Social Security plus 2.9% for Medicare, or 15.3% total, charged on 92.35% of your net self-employment earnings. Employees split that cost with their employer; the self-employed pay both halves. If net earnings are $400 or more for the year, you owe it, and you file Schedule SE with your Form 1040.
Because employers don't pay FICA on their share of the tax itself. Multiplying profit by 0.9235 (which is 1 − 0.0765) removes the equivalent of the employee half from the base, so you're taxed like both halves of a wage. On $90,000 of profit that makes the base $83,115.
Only the Social Security part. For 2026 it applies to the first $184,500 of combined wages and net earnings, down from a maximum $22,878 of Social Security tax. Medicare's 2.9% never stops, and an extra 0.9% applies above $200,000 single or $250,000 joint, so effective rates fall as income rises past the cap.
Legitimately, yes: every legitimate business expense you deduct on Schedule C lowers net profit, which lowers SE tax dollar for dollar. Contributing to a Solo 401(k) or SEP-IRA doesn't reduce SE tax itself (it lowers income tax), but an S-corp election can, by splitting earnings into a salary and distributions. That move adds payroll costs and IRS scrutiny, so price it out first.