Quick answer
Self-employment tax is 15.3% of your net self-employment earnings (which are 92.35% of your net profit). It pays for Social Security (12.4%) and Medicare (2.9%). You owe it once your net profit reaches $400 in a year. In 2026, the Social Security part applies only to the first $184,500 of earnings, and half of the tax is deductible on your income tax return.
For most freelancers, it works out to about 14.1% of net profit, paid on top of regular income tax.
What is self-employment tax?
When you’re an employee, you and your employer each pay 7.65% of your wages for Social Security and Medicare (FICA). When you work for yourself, you’re both the employee and the employer, so you pay both halves. That’s self-employment tax (SE tax).
It’s not an extra penalty for being self-employed: it funds the same Social Security and Medicare benefits you’ll receive later, and your payments count toward your Social Security credits.
2026 self-employment tax rates
| Part | Rate | Applies to |
|---|---|---|
| Social Security | 12.4% | Net SE earnings up to $184,500 (reduced by any W-2 wages) |
| Medicare | 2.9% | All net SE earnings, no cap |
| Additional Medicare tax | 0.9% | Combined wages and SE earnings above $200,000 (single) or $250,000 (married filing jointly), reported on Form 8959 |
| Total (most freelancers) | 15.3% |
Who has to pay it?
Anyone with $400 or more of net earnings from self-employment: sole proprietors, single-member LLC owners, partners in a partnership, independent contractors, gig workers, and creators. It applies whether or not you receive a 1099, and even if you owe no income tax.
How to calculate self-employment tax, step by step
- Find your net profit: business income minus business expenses (Schedule C, line 31).
- Multiply by 92.35% to get your net earnings from self-employment. This adjustment mirrors the fact that employees don’t pay FICA on the employer’s half.
- Social Security part: multiply by 12.4%, up to $184,500 of net earnings (minus any W-2 wages you had).
- Medicare part: multiply all net earnings by 2.9%.
- Add them together. That’s your self-employment tax (Schedule SE).
- Deduct half of it on Schedule 1 of your Form 1040, which lowers your income tax.
Formula: SE tax = (net profit × 0.9235) × 15.3%
Examples for 2026
| Net profit | Net SE earnings (× 92.35%) | Social Security (12.4%) | Medicare (2.9%) | SE tax | Deductible half |
|---|---|---|---|---|---|
| $30,000 | $27,705 | $3,435 | $803 | $4,239 | $2,119 |
| $75,000 | $69,263 | $8,589 | $2,009 | $10,597 | $5,299 |
| $200,000 | $184,700 | $22,878 (capped at $184,500) | $5,356 | $28,234 | $14,117 |
Notice how the rate falls slightly at high incomes: above $184,500 of net earnings you only pay the 2.9% Medicare part.
If you also have a W-2 job
Your W-2 wages count toward the $184,500 Social Security cap first. Example: you earn a $150,000 salary and $60,000 of freelance profit.
- Net SE earnings: $60,000 × 92.35% = $55,410.
- Room left under the cap: $184,500 − $150,000 = $34,500, so Social Security applies only to $34,500: $4,278.
- Medicare on all $55,410: $1,607.
- SE tax: $5,885, well below the $8,478 you’d pay on $60,000 without a salary.
- Because wages and SE earnings together exceed $200,000, about $49 of Additional Medicare tax also applies (0.9% of $5,410) on Form 8959.
For side income under a regular salary, see Side Hustle Taxes.
How to legally reduce your self-employment tax
SE tax is based on profit, so the main levers are lowering profit legitimately or changing how your income is classified:
- Deduct every legitimate business expense. Each $1,000 of deductions saves about $141 of SE tax, plus income tax. See Self-Employed Tax Deductions.
- Elect S-corp status once profits are consistently high. You pay payroll tax only on a reasonable salary, not on distributions. See LLC vs S-Corp for Freelancers.
- Home office and vehicle deductions reduce Schedule C profit, and therefore SE tax.
What doesn’t reduce SE tax: SEP IRA or Solo 401(k) contributions, the self-employed health insurance deduction, and the QBI deduction. These lower your income tax, not your SE tax, because they’re taken after Schedule C.
How to report and pay it
- Schedule C calculates your net profit.
- Schedule SE calculates your self-employment tax.
- Form 1040 (Schedule 2) adds it to your total tax; Schedule 1 deducts half of it.
- Pay during the year through quarterly estimated taxes, which include both income tax and SE tax. See Quarterly Estimated Taxes.
Frequently asked questions
What is the self-employment tax rate for 2026?
15.3% (12.4% Social Security + 2.9% Medicare) on 92.35% of net profit. The Social Security part stops at $184,500 of earnings.
Do I pay self-employment tax if I made less than $400?
No. If your net earnings from self-employment are under $400, you don’t owe SE tax, though you still report the income for income tax.
Is self-employment tax on top of income tax?
Yes. You pay both. Half of the SE tax is deductible, which reduces your income tax a little.
Does self-employment tax count toward Social Security benefits?
Yes. It earns Social Security credits and increases your future benefits, just like FICA on wages.
Why is it 92.35% and not 100%?
Employees don’t pay FICA on the employer’s half of FICA. The 92.35% (100% minus 7.65%) gives the self-employed the same treatment.
Can I avoid self-employment tax with an LLC?
Not by default. A single-member LLC pays SE tax like a sole proprietor. Only an S-corp election changes it.
This article is general information, not tax advice. Consult a CPA or Enrolled Agent for your situation.
Related guides
- How to Pay Estimated Taxes Online (IRS Direct Pay and Online Account)
- Safe Harbor Rule for Estimated Taxes: How to Avoid Penalties
- How to Fill Out Schedule C, Line by Line
- Underpayment Penalty: What It Is and How to Fix It
About this guide
Written by the Freelancer Tax HQ editorial team, based on our professional experience, official US government sources (IRS, SSA and other agencies) and reputable informational articles listed in the sources below. Last reviewed on . Tax rules change often, and we update this guide when they do. Read our editorial policy or report an error.
Sources
- Social Security taxable wage base 2026 (Paycor): $184,500 wage base, 12.4% and 2.9% rates, Additional Medicare tax thresholds.
Examples are FreelancerTaxHQ calculations. The 92.35% factor, $400 threshold and Schedule SE mechanics come from IRS Schedule SE instructions and IRS Topic 554 (Self-employment tax).
Official resources linked in this guide: IRS: Self-Employment Tax; IRS: Tax preparer credentials; IRS: Estimated Taxes; IRS Instructions for Schedule C; IRS: S Corporations.