What Is Self-Employment Tax?
Self-employment tax is the Social Security and Medicare tax for individuals who work for themselves. When you are an employee, your employer pays half of FICA taxes (7.65%) and you pay the other half. When you are self-employed, you pay both halves, for a total of 15.3% on your net self-employment earnings. This is in addition to federal and state income taxes. The self-employment tax rate is 12.4% for Social Security (on income up to $176,100 in 2026) and 2.9% for Medicare (on all income).
- 1Taxable SE income: $80,000 x 92.35% = $73,880
- 2Social Security: $73,880 x 12.4% = $9,161
- 3Medicare: $73,880 x 2.9% = $2,143
- 4Total SE tax: $9,161 + $2,143 = $11,304
- 5SE tax deduction (50%): $11,304 / 2 = $5,652
- 6Adjusted Gross Income: $80,000 - $5,652 = $74,348
- 7Federal taxable income: $74,348 - $15,225 = $59,123
- 8Federal income tax: ~$7,913
- 9Total tax: $11,304 + $7,913 = $19,217
- 10Quarterly estimated payment: $19,217 / 4 = $4,804
Self-Employment Tax Rates (2026)
| Tax Component | Rate | Wage Base / Cap | Notes |
|---|---|---|---|
| Social Security | 12.4% | Up to $176,100 | Employee + employer portions combined |
| Medicare | 2.9% | No cap | Applies to all SE earnings |
| Additional Medicare | 0.9% | Over $200,000 (single) | High-income surtax |
| Total SE Tax | 15.3% | Varies | Applied to 92.35% of net SE income |
| Deductible Portion | 50% | N/A | Deduct half of SE tax from AGI |
SE Tax vs. Employee FICA Tax
Self-employed individuals effectively pay double the FICA tax that employees pay because there is no employer to cover half. An employee earning $80,000 pays 7.65% ($6,120) in FICA, while a self-employed person earning $80,000 pays 15.3% of 92.35% = $11,304. However, the IRS allows you to deduct the employer-equivalent portion (50% of SE tax) from your adjusted gross income, which partially offsets the higher cost.
Quarterly Estimated Tax Payments
Self-employed individuals must make quarterly estimated tax payments if they expect to owe $1,000 or more in taxes. Failure to make timely payments results in penalties. The quarterly due dates for 2026 are April 15, June 15, September 15, and January 15, 2027. You can use Form 1040-ES or pay online at IRS.gov/payments.
The IRS charges a penalty if you do not pay enough estimated tax throughout the year. To avoid penalties, pay at least 100% of last year's tax liability or 90% of this year's expected liability (110% if your AGI exceeds $150,000). Setting aside 25-30% of every payment you receive for taxes is a reliable approach.
Top Tax Deductions for Self-Employed
- Home office deduction: $5 per sq ft up to 300 sq ft ($1,500 max) or actual expenses
- Health insurance premiums: 100% deductible for self-employed if not eligible for employer plan
- Retirement contributions: SEP IRA (up to 25% of net SE income, max $70,000 in 2026) or Solo 401(k)
- Vehicle expenses: Standard mileage rate of $0.70/mile (2026) or actual expenses
- Business equipment and supplies: Section 179 deduction for equipment purchases
- Professional development: Courses, books, conferences related to your business
- Software and subscriptions: Business tools, cloud services, professional memberships
- Self-employment tax deduction: 50% of SE tax deducted from AGI (automatic)
Self-Employment Tax by Income Level
| Net SE Income | SE Tax | Federal Income Tax | Total Federal Tax | Effective Rate |
|---|---|---|---|---|
| $30,000 | $4,239 | $1,107 | $5,346 | 17.8% |
| $50,000 | $7,065 | $3,306 | $10,371 | 20.7% |
| $75,000 | $10,597 | $6,906 | $17,503 | 23.3% |
| $100,000 | $14,130 | $11,106 | $25,236 | 25.2% |
| $150,000 | $19,461 | $22,106 | $41,567 | 27.7% |
| $200,000 | $24,285 | $34,856 | $59,141 | 29.6% |