Self-Employment Tax Calculator

How SE tax works

US self-employment tax is 15.3% (12.4% Social Security + 2.9% Medicare) applied to about 92.35% of your net earnings. Crucially, the 12.4% Social Security portion only applies up to the annual wage base ($184,500 for 2026) — income above that is Medicare-only. High earners also pay an extra 0.9% Additional Medicare on earnings over $200,000. Half of your regular SE tax is deductible against income tax. This calculator applies all of these rules.

US federal estimate for 2025/26 — not tax advice. Excludes state tax and personal credits.

How self-employment tax is calculated — the formula

SE tax is worked out in a few steps: take 92.35% of your net profit (that mirrors the employer-side deduction employees get), then apply Social Security up to the wage base and Medicare with no cap.

Income tax is separate: the calculator estimates it at the rate you enter, applied after the half-SE-tax deduction. For a fuller federal estimate with brackets, deductions and credits, run your numbers through the income tax calculator.

The half-SE-tax deduction

Because employees don't pay income tax on the employer's half of payroll tax, the self-employed get a matching break: half of your SE tax is an above-the-line deduction on your income tax return. On the $80,000 example that's about $5,651 off your taxable income — it doesn't reduce the SE tax itself, but it lowers the income tax on top. The calculator applies it before estimating income tax.

Quarterly estimated taxes

No employer is withholding money for you, so the IRS expects the self-employed to pay estimated tax four times a year — roughly mid-April, mid-June, mid-September and mid-January — covering both SE tax and income tax. A common rule of thumb is to set aside 25–30% of each payment you receive. Underpaying can trigger a penalty, so use this estimate to size your quarterly set-aside.

Ways to lower self-employment tax

• Deduct every legitimate business expense — SE tax is on net profit, so home office, mileage, equipment, software and supplies all reduce the base.
• Retirement contributions — a SEP-IRA or solo 401(k) lowers your income tax (though not the SE-tax base).
• Consider an S-corporation at higher profits — you pay SE-equivalent tax only on a reasonable salary, not the whole profit; weigh the extra admin and payroll costs first.
• Self-employed health insurance — premiums are often deductible.

General information, not tax advice — a CPA can confirm what fits your business.

How to use it & key terms

Enter your net business income and an estimated income-tax rate, then press Calculate to see your self-employment tax, estimated income tax and total.

Deductions and quarterly payments that ease the bill

Self-employment tax feels steep because you pay both the employee and employer halves — a combined 15.3% (12.4% for Social Security up to an annual wage cap the SSA sets each year, plus 2.9% for Medicare with no cap, and an extra 0.9% Medicare surtax on high earners). The code softens it in ways worth knowing. First, you are taxed on 92.35% of net self-employment earnings, not the full amount. Second, you can deduct one-half of the self-employment tax as an above-the-line adjustment — it does not cut the SE tax itself, but it lowers your income tax.

Third, ordinary business expenses reduce the net profit the tax is figured on, so careful bookkeeping directly lowers the bill. Because no employer withholds for you, the IRS expects quarterly estimated payments (Form 1040-ES); missing them can trigger an underpayment penalty even if you settle up in April. Setting aside a fixed share of every invoice is the simplest way to stay ahead of it.

Why it runs higher than an employee's — and what it buys

The sting of self-employment tax comes from a structural quirk of payroll tax. For an employee, Social Security and Medicare are split down the middle — the worker pays one half and the employer quietly covers the other, so most people only ever see their own portion on a pay stub. When you work for yourself, you are both parties, so you shoulder the combined rate on your own. Nothing has been added to single out the self-employed; you are simply seeing the whole of a tax that employees only ever half-see, which explains most of the shock the first time a return shows the full amount.

It also helps to understand that this is a separate tax from income tax, not a version of it. The two are worked out on different bases and then stacked together, which is why a freelancer can face a real self-employment tax bill even in a year when income tax is modest — the two do not cancel out. Because no employer is withholding anything on your behalf, the job of setting money aside for both taxes as income arrives falls entirely on you, which is where a disciplined set-aside from every invoice earns its keep.

The flip side is easy to overlook: this tax is not money into a void. The Social Security and Medicare portions build your entitlement to those programmes later in life, so paying it is also earning credit toward future retirement and health benefits in a way that skipping it never could. The rules soften the blow, too — you are charged on slightly less than your full profit, to mirror the employer-side treatment employees receive, and half of what you pay can be deducted when you work out your income tax.

Put together, the higher headline rate reflects who is paying rather than a penalty for working for yourself — and part of it flows back to you as a deduction now and as benefits later. The rate and the wage cap it applies to are reset each year, so last year's figure is only a guide. Use the number here to size your quarterly set-aside, and confirm the details against current official guidance before you file.