What Is Self-Employment Tax? (2026)
Self-employment tax is the Social Security and Medicare tax you pay when you work for yourself. Here's exactly how the 15.3% rate works and how to calculate yours.
The rate: 15.3% = 12.4% Social Security + 2.9% Medicare, applied to 92.35% of your net self-employment earnings. For 2026, the Social Security portion applies to the first $184,500 of earnings; Medicare has no cap.
Why it exists
When you're an employee, you and your employer each pay half of Social Security and Medicare taxes (7.65% each). When you're self-employed, you're both the employee and the employer, so you pay the full 15.3% yourself. That's self-employment tax, and it's on top of regular income tax. It's the number that surprises most first-time freelancers.
How it's calculated
- Start with your net earnings (business profit after expenses).
- Multiply by 92.35%, only that portion is subject to the tax.
- Apply 12.4% Social Security tax to that amount, up to the 2026 wage base of $184,500.
- Apply 2.9% Medicare tax to the entire amount, with no cap.
Example: on $80,000 of net profit, roughly $73,880 is taxable for SE purposes, giving about $11,300 in self-employment tax.
The two breaks that soften it
- You deduct half. One-half of your self-employment tax is an above-the-line deduction that reduces your income tax, so you're not taxed twice on the employer half.
- The QBI deduction. Many self-employed people also qualify for a 20% deduction on qualified business income, which lowers income tax (not SE tax).
The high-earner add-on
If your combined wages and self-employment earnings exceed $200,000 (single or head of household) or $250,000 (married filing jointly), an additional 0.9% Medicare tax applies to the amount above that threshold. There's no employer match on this piece.
Who has to pay it
You owe self-employment tax if your net earnings from self-employment are $400 or more for the year. That includes freelance, 1099 contractor, gig, and single-member LLC income.
Estimate your taxes now →Enter your income and see your federal, self-employment, and state tax in seconds, free.Can you reduce it?
Two main levers: claim every legitimate business deduction to lower your net profit, and, if your profit is high enough, consider electing S-corporation status so part of your income comes out as a distribution that isn't subject to self-employment tax. Whether that saves money depends on your numbers.
Compare LLC vs S-corp →See how much an S-corp election could save you at your income level.