Self-employment tax (SE tax) is how people who work for themselves pay Social Security and Medicare. This guide uses the IRS Topic 554 and the IRS self-employment tax page and works through an example. To run your own numbers, use our self-employment tax calculator.
Updated November 2026
The rules, in brief
- The rate is 15.3 percent: 12.4 percent for Social Security and 2.9 percent for Medicare.
- The tax applies to 92.35 percent of your net earnings from self-employment.
- You generally must pay it and file Schedule SE if net earnings are $400 or more.
- For 2026, the Social Security part applies to the first $184,500 of combined wages, tips and net earnings, per the IRS page.
- You can deduct the employer-equivalent portion of SE tax when figuring adjusted gross income. It does not reduce the SE tax itself.
- Additional Medicare tax can apply above income thresholds ($200,000 for single filers, $250,000 for married filing jointly and $125,000 for married filing separately, per Topic 554).
The formula
Worked example: $60,000 net profit
| Net profit from self-employment | $60,000.00 |
| x 92.35% | $55,410.00 |
| Social Security: 12.4% of $55,410 | $6,870.84 |
| Medicare: 2.9% of $55,410 | $1,606.89 |
| Self-employment tax | $8,477.73 |
| Deductible half (employer-equivalent portion) | $4,238.87 |
In Excel: =60000*0.9235*0.153 returns 8,477.73. The example assumes no wages from a job, so the whole $55,410 is under the $184,500 Social Security limit. Income tax is separate and is calculated on top.
What counts as net profit
Net profit is your self-employment income minus allowed business expenses. A tidy record of both makes the figure easier to defend. See the Schedule C categories guide for common expense categories.
Paying it through the year
Most self-employed people pay SE tax and income tax in quarterly estimated payments. Our quarterly estimated tax guide and calculator show how.
This is general information, not tax advice. Rules and limits change each year. Check the IRS pages or a qualified tax professional for your situation.
Frequently asked questions
What is the self-employment tax rate?
It is 15.3 percent: 12.4 percent Social Security and 2.9 percent Medicare, applied to 92.35 percent of net earnings.
When do I have to pay self-employment tax?
Generally when your net earnings from self-employment are $400 or more.
What is the 2026 Social Security limit?
The IRS page gives $184,500 for the Social Security part.
Can I deduct self-employment tax?
You can deduct the employer-equivalent portion when figuring adjusted gross income.