How is self-employment tax calculated?

SE tax is 15.3% of 92.35% of your net self-employment profit — 12.4% for Social Security (up to the wage base) plus 2.9% for Medicare. You deduct half of it above the line on Form 1040.

Why is only 92.35% of my profit taxed?

The 92.35% factor approximates the employer-side deduction a regular employee never sees, so the self-employed aren't taxed on the portion that mirrors the employer's half of FICA.

Do W-2 wages reduce my SE tax?

Yes — Social Security wages you've already paid through a W-2 job count toward the annual wage base, reducing the Social Security portion of your SE tax. Medicare has no cap.

Why is the self-employment tax 15.3% instead of 7.65%?

Because the self-employed pay both the employee and employer halves of FICA. A W-2 employee pays 7.65% and their employer matches it; a self-employed person covers all 15.3% themselves. You recover part of the sting through the deduction for one-half of SE tax.

Do I owe self-employment tax if I have a regular job too?

Yes, but your W-2 wages count first against the Social Security wage base. If your job already paid Social Security tax up to the 2026 base ($184,500), the 12.4% Social Security portion of your SE tax may be reduced or eliminated, though the 2.9% Medicare portion still applies to all net earnings.

At what income do I have to start paying self-employment tax?

You owe SE tax once your net self-employment earnings reach $400 for the year. Below $400 there is no SE tax, though the income may still be subject to regular income tax. The $400 threshold has been fixed for decades and is not inflation-adjusted.

Does the self-employment tax deduction reduce my SE tax?

No — the deduction for one-half of SE tax reduces your income tax, not the SE tax itself. You still pay the full 15.3% on net earnings, but you get to subtract half of that amount from your taxable income, which lowers your income-tax bill.

Can business deductions lower my self-employment tax?

Yes. SE tax is calculated on net profit, so every legitimate business expense you deduct lowers the base it is applied to. Reducing net profit by $1,000 cuts SE tax by roughly $140 (after the 92.35% factor), in addition to any income-tax savings.

Self-Employment Tax Calculator 2026 (15.3%)

Quick answer: Self-employment tax is 15.3% of 92.35% of your net profit — 12.4% Social Security (up to $184,500 for 2026) plus 2.9% Medicare — and you deduct half of it on your 1040.

How it works

1. Find your net self-employment earnings
Start with your net profit — gross self-employment income minus business expenses. Multiply that by 92.35% to get the portion subject to SE tax. This net factor exists because employees do not pay the employer-side payroll tax on the matching half, so the law removes an equivalent slice before the tax is applied.
2. Apply the 15.3% rate in two parts
SE tax is 15.3%: 12.4% for Social Security and 2.9% for Medicare. The 12.4% Social Security portion applies only up to the annual wage base ($184,500 for 2026), while the 2.9% Medicare portion has no cap. High earners add a 0.9% Additional Medicare Tax above $200,000 single or $250,000 married filing jointly.
3. Deduct half above the line
You deduct one-half of your SE tax as an adjustment to income on your Form 1040, which lowers your income tax (not the SE tax itself). The calculator estimates both the SE tax owed and this deduction so you can plan quarterly payments. Treat the result as an estimate, not tax advice.

Frequently asked questions

How is self-employment tax calculated?
SE tax is 15.3% of 92.35% of your net self-employment profit — 12.4% for Social Security (up to the wage base) plus 2.9% for Medicare. You deduct half of it above the line on Form 1040.
Why is only 92.35% of my profit taxed?
The 92.35% factor approximates the employer-side deduction a regular employee never sees, so the self-employed aren't taxed on the portion that mirrors the employer's half of FICA.
Do W-2 wages reduce my SE tax?
Yes — Social Security wages you've already paid through a W-2 job count toward the annual wage base, reducing the Social Security portion of your SE tax. Medicare has no cap.
Why is the self-employment tax 15.3% instead of 7.65%?
Because the self-employed pay both the employee and employer halves of FICA. A W-2 employee pays 7.65% and their employer matches it; a self-employed person covers all 15.3% themselves. You recover part of the sting through the deduction for one-half of SE tax.
Do I owe self-employment tax if I have a regular job too?
Yes, but your W-2 wages count first against the Social Security wage base. If your job already paid Social Security tax up to the 2026 base ($184,500), the 12.4% Social Security portion of your SE tax may be reduced or eliminated, though the 2.9% Medicare portion still applies to all net earnings.
At what income do I have to start paying self-employment tax?
You owe SE tax once your net self-employment earnings reach $400 for the year. Below $400 there is no SE tax, though the income may still be subject to regular income tax. The $400 threshold has been fixed for decades and is not inflation-adjusted.
Does the self-employment tax deduction reduce my SE tax?
No — the deduction for one-half of SE tax reduces your income tax, not the SE tax itself. You still pay the full 15.3% on net earnings, but you get to subtract half of that amount from your taxable income, which lowers your income-tax bill.
Can business deductions lower my self-employment tax?
Yes. SE tax is calculated on net profit, so every legitimate business expense you deduct lowers the base it is applied to. Reducing net profit by $1,000 cuts SE tax by roughly $140 (after the 92.35% factor), in addition to any income-tax savings.

Self-Employment Tax Calculator

How it works

1. Find your net self-employment earnings

2. Apply the 15.3% rate in two parts

3. Deduct half above the line