Self-Employment Tax Calculator

The IRS calculates self-employment tax on 92.35% of net earnings (not the full amount), reflecting the employer-equivalent deduction built into the calculation. If your Schedule C shows $100,000 net profit, the taxable base is $92,350.

On that base, the tax breaks down as follows:

• Social Security tax: $92,350 × 12.4% = $11,451.40 (capped at $168,600 base).
• Medicare tax: $92,350 × 2.9% = $2,678.15 (no cap).
• Total SE tax: $14,129.55.

You then deduct half ($7,064.78) from gross income on your 1040, reducing both income tax and AGI. This deduction means the effective SE tax rate is approximately 14.13% rather than the stated 15.3%.

For high earners above $200,000 ($250,000 married filing jointly), the additional 0.9% Medicare surtax applies to earnings above the threshold.

Self-employed individuals must make quarterly estimated tax payments (Form 1040-ES) by April 15, June 15, September 15, and January 15.

The IRS imposes underpayment penalties if you owe more than $1,000 at filing time and haven't paid either 90% of current year tax or 100% of prior year tax (110% if AGI exceeds $150,000).

A common strategy is the safe harbor method — pay 100/110% of last year's total tax liability divided into four equal payments, regardless of current year income fluctuations.

Many freelancers set aside 25-30% of every payment received in a separate bank account for taxes: roughly 15.3% for SE tax plus 10-15% for federal income tax, depending on bracket.

The most effective strategy is electing S-corporation status once net income exceeds approximately $40,000-50,000. As an S-corp owner, you pay yourself a reasonable salary (subject to FICA) and take remaining profits as distributions (not subject to SE tax). On $100,000 net income with a $60,000 salary, you save SE tax on $40,000 — approximately $5,652 annually.

However, S-corp status adds compliance costs ($1,000-3,000 per year for payroll and tax preparation), so the breakeven point matters.

Other strategies include:

• maximizing business deductions (home office, health insurance premiums, retirement contributions),
• contributing to a SEP-IRA (up to 25% of net self-employment income, maximum $69,000 in 2026),
• and properly classifying workers to avoid unnecessary SE tax on payments to subcontractors.

The self-employment (SE) tax rate is 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare. Per the IRS, it covers both the employee and employer halves of these payroll taxes that a job would normally split.

On $100,000 of net self-employment earnings, SE tax is about $14,129.55. It applies on top of regular income tax, which is why self-employed people often owe more than employees at the same income.

SE tax is not charged on your full profit. The IRS taxes 92.35% of net self-employment earnings (Schedule SE), reflecting the employer-half deduction.

So $100,000 of net earnings becomes $92,350.00 taxable, and 15.3% of that is about $14,129.55.

This calculator applies the 92.35% factor and the 15.3% rate automatically, then accounts for the Social Security wage cap and any W-2 wages that reduce the Social Security portion.

The 12.4% Social Security portion of SE tax only applies up to the annual Social Security wage base, which the SSA adjusts each year ($176,100 for 2025). Earnings above the cap owe only the 2.9% Medicare portion, not the full 15.3%.

If you also have a W-2 job, those wages count toward the cap first and reduce the SE earnings still subject to Social Security tax — an important interaction this calculator handles.

High earners owe an extra 0.9% Additional Medicare Tax on earnings above a threshold ($200,000 single, $250,000 married filing jointly), per the IRS.

Unlike the base Medicare rate, there is no employer match and no wage cap on this surtax. It applies to combined wages and self-employment income over the threshold, so successful self-employed individuals should plan for it on top of the standard 15.3% SE tax.

You can deduct half of your SE tax when figuring your income tax — an above-the-line deduction that does not require itemizing.

On the $100,000 example with about $14,129.55 in SE tax, roughly $7,064.77 is deductible.

The IRS allows this because employees do not pay income tax on the employer's share of payroll taxes, so this deduction levels the field. It lowers your adjusted gross income but not the SE tax itself.

SE tax and income tax are separate obligations. SE tax (15.3%) funds Social Security and Medicare and is calculated on net business earnings. Income tax is calculated on your total taxable income using the federal brackets.

A self-employed person owes both, which is why setting aside roughly 25-30% of profit for taxes is a common rule of thumb. Confusing the two, or budgeting only for income tax, is a frequent cause of a surprise tax bill.

Because no employer withholds tax from self-employment income, the IRS requires quarterly estimated tax payments covering both SE and income tax. Missing them or underpaying can trigger an underpayment penalty.

The IRS safe harbor generally avoids penalties if you pay at least 90% of the current year's tax or 100-110% of last year's. Paying quarterly on the IRS schedule keeps you penalty-free and avoids a large lump sum at filing.

Common mistakes include:

• forgetting SE tax exists and budgeting only for income tax,
• not making quarterly payments,
• overlooking the half-of-SE-tax deduction,
• misapplying the Social Security wage cap when also holding a W-2 job,
• and missing the Additional Medicare Tax at higher incomes.

Track net earnings, set aside ~25-30%, pay estimates quarterly, and take the employer-half deduction. Deductible business expenses that lower net earnings also lower SE tax.