Self-employment tax is the Social Security and Medicare tax you pay when you work for yourself. For 2026 the rate is 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare, applied to 92.35% of your net self-employment earnings. It is separate from, and in addition to, federal income tax.
Employees split these same taxes with their employer, so they only see half on their pay stubs. When you are self-employed, you are both the employee and the employer, so you pay both halves. This guide shows exactly how the self employment tax is calculated, where the wage base comes in, and how it compares with a W-2 job.
Who pays self-employment tax
You generally owe self-employment tax if you have net earnings from self-employment of $400 or more in a year. That includes:
- Freelancers and independent contractors paid on a Form 1099
- Sole proprietors and single-member LLC owners taxed as sole proprietors
- Partners in a partnership, on their share of business income
- Gig workers, such as rideshare and delivery drivers
"Net earnings" means your business income minus your business expenses, not your gross receipts. A designer who bills $90,000 and has $20,000 in deductible business costs has $70,000 of net profit.
How self-employment tax is calculated
The calculation has three steps:
- Find net profit. Business income minus deductible business expenses.
- Multiply by 92.35%. This mirrors the fact that employees don't pay FICA on the employer's half. The result is your net earnings subject to self-employment tax.
- Apply the rates. 12.4% Social Security on earnings up to the 2026 wage base of $184,500, plus 2.9% Medicare on all of it.
When you file, you can deduct half of your self-employment tax in figuring adjusted gross income. That deduction lowers your income tax, though not the self-employment tax itself.
Worked example: $70,000 net profit
A single freelancer in Florida, which has no state income tax, has $70,000 of net profit for 2026.
| Step | Amount |
|---|---|
| Net profit | $70,000.00 |
| Times 92.35% | $64,645.00 |
| Social Security at 12.4% | $8,015.98 |
| Medicare at 2.9% | $1,874.71 |
| Self-employment tax | $9,890.68 |
| Deduction for half of SE tax | $4,945.34 |
| Adjusted gross income (before other adjustments) | $65,054.66 |
To estimate income tax, we ran that $65,054.66 through the PaycheckHubs paycheck calculator, which applies the standard deduction and 2026 brackets. It estimates federal income tax of about $5,627. That brings the freelancer's total federal tax to roughly $15,517, before any other deductions or credits.
Self-employment tax vs FICA on a W-2 job
Compare that freelancer with a single Florida employee earning a $70,000 salary. The calculator estimates:
| Annual figure | W-2 employee, $70,000 salary | Freelancer, $70,000 net profit |
|---|---|---|
| Social Security and Medicare paid by the worker | About $5,355 | About $9,891 |
| Federal income tax | About $6,570 | About $5,627 |
| Total federal tax | About $11,925 | About $15,517 |
The freelancer pays more in payroll-type tax but slightly less income tax, thanks to the deduction for half of self-employment tax. The employee's employer also pays its own 7.65% on top of the salary, which doesn't show on the pay stub. Our guide to 1099 vs W-2 take-home pay compares the two arrangements in more depth.
The Social Security wage base and high earners
The 12.4% Social Security part stops once your combined wages and net self-employment earnings reach $184,500 for 2026. The 2.9% Medicare part has no limit.
For example, a single consultant with $200,000 of net profit has $184,700 of net earnings after the 92.35% step. Social Security applies to $184,500 of that ($22,878), and Medicare applies to all $184,700 ($5,356.30), for total self-employment tax of $28,234.30.
If you also have a W-2 job, the Social Security wages from that job count toward the same $184,500 limit, which can reduce the Social Security part of your self-employment tax. See our article on the Social Security wage base.
Additional Medicare Tax
High earners can also owe the 0.9% Additional Medicare Tax on combined wages and self-employment income above $200,000 for single and head of household filers, $250,000 for married couples filing jointly, or $125,000 for married filing separately. This is figured on your tax return.
How and when you pay it
No employer withholds self-employment tax for you. You calculate it on Schedule SE with your Form 1040, and you generally pay it during the year through quarterly estimated tax payments, along with your income tax. If you also have a W-2 job, raising withholding there is another way to cover it.
Our guide to quarterly estimated tax payments covers deadlines and how to figure each payment.
Ways the bill can be lower
Self-employment tax is based on net profit, so legitimate business expenses reduce it directly. Common examples include equipment, software, a portion of a home office that meets IRS rules, and business mileage. Keep records and receipts for anything you deduct.
Some business owners also look at different business structures. The rules there are detailed, so talk with a tax professional before changing how your business is set up.
State income tax applies to self-employment income in most states, though the nine states without a wage tax, such as Florida and Texas, don't tax it. Check the state calculators for your state's rates.
Frequently Asked Questions
What is the self-employment tax rate for 2026?
It's 15.3%: 12.4% for Social Security on earnings up to $184,500 and 2.9% for Medicare with no cap, applied to 92.35% of net self-employment earnings.
Do I pay self-employment tax if I earn under $400?
Generally no. Self-employment tax applies when net earnings from self-employment are $400 or more for the year.
Is self-employment tax the same as income tax?
No. Self-employment tax covers Social Security and Medicare. Income tax is calculated separately using the tax brackets, and you owe both.
Can I deduct self-employment tax?
You can deduct half of it when figuring adjusted gross income. That lowers your income tax but not the self-employment tax itself.
Sources
- IRS: Self-Employment Tax (Social Security and Medicare Taxes)
- SSA: Contribution and Benefit Base
- IRS: Estimated Taxes
- IRS Topic 560, Additional Medicare Tax
Run the numbers for your state
Written and checked against IRS, Social Security Administration and state tax agency publications for the 2026 tax year. General information, not tax, legal or financial advice. Read our editorial policy, calculation methodology and sources.