How to calculate self-employment tax in 2026
Updated · Tax year 2026 · By Volkan Eren · Sources & method
How is self-employment tax calculated?
Employees split Social Security and Medicare tax with their employer: each pays 7.65%. When you work for yourself, you pay both halves. The IRS calls this self-employment (SE) tax and you figure it on Schedule SE.
- Start with net profit from Schedule C: your business income minus business expenses.
- Multiply by 92.35%. This is your net earnings from self-employment. The 7.65% reduction mirrors the employer half of payroll tax that an employee never sees on their W-2.
- Social Security: 12.4% of net earnings up to the 2026 wage base of $184,500.
- Medicare: 2.9% of all net earnings, with no cap.
- Add them. That is your SE tax. Half of it is deductible when you figure your adjusted gross income.
Worked example: $100,000 of net profit
| Step | Calculation | Amount |
|---|---|---|
| Net profit | From Schedule C | $100,000.00 |
| Net earnings from self-employment | $100,000 × 92.35% | $92,350.00 |
| Social Security tax | $92,350 × 12.4% | $11,451.40 |
| Medicare tax | $92,350 × 2.9% | $2,678.15 |
| Self-employment tax | $11,451.40 + $2,678.15 | $14,129.55 |
| Deductible half | $14,129.55 ÷ 2 | $7,064.78 |
That is an effective rate of about 14.1% of net profit. The deductible half lowers your income tax, not your SE tax.
What changes at higher incomes
The Social Security cap. Once net earnings pass $184,500 (net profit of about $199,783), the 12.4% part stops. Medicare keeps going. On $250,000 of net profit, net earnings are $230,875, so SE tax is $22,878 of Social Security plus $6,695.38 of Medicare: $29,573.38.
The Additional Medicare Tax. An extra 0.9% applies to net earnings above $200,000 for single filers ($250,000 married filing jointly, $125,000 married filing separately). These thresholds are not indexed for inflation. It is figured on Form 8959, not Schedule SE, and none of it is deductible. If you also have W-2 wages, the wages use up the threshold first.
If you also have a W-2 job
Social Security wages from a job count toward the same $184,500 cap. If your W-2 wages already reached the cap, you pay only the 2.9% Medicare part on your freelance earnings. A spouse's wages do not reduce your cap: the wage base applies to each person separately.
How to pay it
No one withholds SE tax for you. You pay it through quarterly estimated tax payments along with your income tax, then settle up on your Form 1040. Use the quarterly estimated tax calculator to split it into the four payments, or the self-employment tax calculator to run your own numbers.
When you set your prices, SE tax is the cost that most surprises new freelancers. The freelance rate calculator builds it into your minimum hourly rate automatically.
Frequently asked questions
Do I owe self-employment tax if I made less than $400?
No. You owe self-employment tax only when your net earnings from self-employment (92.35% of net profit) are $400 or more for the year.
Is self-employment tax the same as income tax?
No. Self-employment tax funds Social Security and Medicare and is calculated on Schedule SE. Income tax is separate and calculated on your taxable income after deductions. Most freelancers owe both.
Does the QBI deduction reduce self-employment tax?
No. The qualified business income deduction lowers income tax only. Self-employment tax is figured on net profit before the QBI deduction.
Sources
- IRS: Self-employment tax (Social Security and Medicare taxes)
- IRS: About Schedule SE (Form 1040)
- SSA: 2026 contribution and benefit base
- IRS: Questions and answers for the Additional Medicare Tax
- IRS: Instructions for Form 8959, Additional Medicare Tax
- 26 U.S. Code § 164(f), deduction for one-half of self-employment tax
Estimates for educational and planning purposes only. HourFloor does not provide tax, legal or financial advice. Verify your numbers with a qualified tax professional.