Self-Employment Tax Calculator

Self-employment tax is how Social Security and Medicare taxes get collected from people who work for themselves instead of a W-2 employer. A traditional employee and employer each pay 7.65% of wages (6.2% Social Security plus 1.45% Medicare), for a combined 15.3%. A self-employed person is both the employee and the employer, so the full 15.3% (formally called SECA tax, for Self-Employment Contributions Act) falls on one person's Schedule SE.

This calculator starts from net business profit, the bottom line from Schedule C after business expenses, and applies the IRS's 92.35% adjustment before calculating tax. That adjustment exists because the employer-side half of SECA tax is not itself subject to SECA tax, mirroring how a W-2 employer's matching FICA contribution is never taxed as the employee's income. From that adjusted figure, 12.4% goes to Social Security (up to the annual wage base cap) and 2.9% goes to Medicare (with no cap).

Because many people who freelance or run a side business also hold a W-2 job, this calculator accepts a W-2 wages field and reduces the remaining Social Security wage base capacity accordingly. Social Security tax is only owed on earnings up to the annual cap across all sources combined, W-2 and self-employment together, so someone whose W-2 wages already exceed the cap owes no additional Social Security portion on their self-employment income, only the uncapped Medicare portion.

$$\text{SE Taxable Earnings} = \text{Net Business Profit} \times 0.9235$$

$$\text{Social Security Tax} = \min\left(\text{SE Taxable Earnings},\ \max(0,\ \text{Wage Base Cap} - \text{W-2 Wages})\right) \times 12.4\%$$

$$\text{Medicare Tax} = \text{SE Taxable Earnings} \times 2.9\%$$

$$\text{Total SE Tax} = \text{Social Security Tax} + \text{Medicare Tax}$$

$$\text{Above-the-Line Deduction} = \text{Total SE Tax} \times 50\%$$

For 2026, the Social Security wage base cap is $184,500, set annually by the Social Security Administration and indexed to national average wage growth. There is no cap on the Medicare portion; every dollar of SE taxable earnings is subject to the 2.9% Medicare rate regardless of how high net profit climbs. If net business profit falls below $400, no self-employment tax is owed at all, matching the IRS's own filing threshold for Schedule SE.

The 50% deduction in the last line is not a reduction of the tax itself, it is a separate above-the-line deduction claimed on Form 1040 that lowers adjusted gross income, roughly offsetting the fact that a W-2 employee never pays income tax on the employer's half of FICA either.

Scenario 1: Full-time 1099 income, no W-2 wages. Net business profit of $100,000, $0 in W-2 wages subject to Social Security.

Step 1: Apply the 92.35% adjustment. $$\$100{,}000 \times 0.9235 = \$92{,}350$$

Step 2: Determine remaining Social Security capacity. $$\max(0,\ \$184{,}500 - \$0) = \$184{,}500$$

Since $92,350 is less than the $184,500 remaining capacity, the full amount is subject to Social Security tax.

Step 3: Social Security tax. $$\$92{,}350 \times 12.4\% = \$11{,}451.40$$

Step 4: Medicare tax (uncapped). $$\$92{,}350 \times 2.9\% = \$2{,}678.15$$

Step 5: Total self-employment tax. $$\$11{,}451.40 + \$2{,}678.15 = \$14{,}129.55$$

Step 6: Above-the-line deduction. $$\$14{,}129.55 \times 50\% = \$7{,}064.78$$

Step 7: Effective SE rate. $$\frac{\$14{,}129.55}{\$100{,}000} \times 100 = 14.13\%$$

Scenario 2: Side hustle stacked on top of a high W-2 salary. Net business profit of $50,000, $190,000 in W-2 wages, which already exceeds the $184,500 Social Security wage base on its own.

SE taxable earnings: $50,000 × 0.9235 = $46,175. Remaining Social Security capacity: max(0, $184,500 − $190,000) = $0, since the W-2 wages alone already exceed the cap. Social Security tax on the self-employment income is therefore $0. Medicare tax still applies in full, uncapped: $46,175 × 2.9% = $1,339.08. Total self-employment tax is just $1,339.08, dramatically lower than Scenario 1 despite a smaller profit gap, purely because the W-2 income already used up the Social Security wage base.

Scenario 3: Below the filing threshold. Net business profit of $350, under the $400 minimum. Total self-employment tax is $0; Schedule SE is not required to be filed for self-employment earnings under $400.

• The Additional Medicare Tax. A separate 0.9% surtax applies to combined wages and self-employment income above $200,000 (single) or $250,000 (married filing jointly), reported on Form 8959. This calculator computes only the base 2.9% Medicare rate, not the additional surtax layer.
• Federal and state income tax. Self-employment tax is calculated independently of income tax. Net business profit is also subject to ordinary federal (and often state) income tax on top of the SECA tax computed here.
• Quarterly estimated tax penalties. The IRS expects self-employed taxpayers to pay estimated tax quarterly; underpayment can trigger penalties under IRC Section 6654 that this calculator does not model.
• Business expense and depreciation nuances. This tool starts from net profit as a single input; it does not calculate Schedule C itself, including depreciation methods, home office deductions, or vehicle expense elections that determine that net profit figure.
• Multiple business entities or partnerships. Income from a partnership (Schedule K-1) or an S-corporation is treated differently for self-employment tax purposes than sole proprietor Schedule C income, and this calculator assumes a single sole proprietorship or single-member LLC context.
• State-level self-employment or franchise taxes. Some states impose their own business-level taxes independent of the federal SECA calculation shown here.

• Forgetting the Additional Medicare surtax. High earners often calculate the base 15.3% SECA rate correctly but forget the extra 0.9% Medicare surtax that kicks in once combined income crosses the statutory threshold, understating their true liability.
• Applying the Social Security cap per income source instead of in aggregate. The wage base cap applies across all earned income combined, W-2 and self-employment together. Someone with both should reduce their remaining Social Security capacity by prior W-2 wages before calculating the self-employment portion, exactly as this calculator does.
• Confusing the 50% deduction with a 50% tax reduction. The deduction lowers adjusted gross income for income tax purposes; it does not cut the self-employment tax bill itself in half.
• Using gross revenue instead of net profit. Self-employment tax is calculated on net profit after business expenses, not on total revenue or gross receipts.
• Skipping the 92.35% adjustment. Applying the 15.3% combined rate directly to net profit, without first multiplying by 0.9235, overstates the tax owed on every dollar of profit.

• Internal Revenue Service, Publication 505, Tax Withholding and Estimated Tax.
• Internal Revenue Service, Instructions for Schedule SE (Form 1040), Self-Employment Tax.
• Internal Revenue Service, Form 8959 Instructions, Additional Medicare Tax.
• Social Security Administration, 2026 Social Security Changes Fact Sheet (annual wage base determination).