What is the Self-Employment Tax?
Self-employed people pay self-employment tax — both the employee and employer halves of Social Security and Medicare, totalling 15.3% — plus regular federal income tax.
Two adjustments soften it: SE tax applies to only 92.35% of net profit, and half of the SE tax is deductible against income tax. You must also pay quarterly estimated taxes rather than having tax withheld.
Formula & worked example
SE tax = base × 15.3% (12.4% SS to the wage cap + 2.9% Medicare)
AGI = Net profit − half of SE tax
Quarterly payment = Total tax / 4
Worked example: $95,000 of net profit as a single filer. The SE base is $87,733, giving SE tax of about $13,423. Half ($6,712) is deductible, so federal income tax comes to about $10,593. Total tax is roughly $24,017 — an effective rate of 25.3% — or about $6,004 per quarter.
How to use this self-employment tax calculator
- Enter your net profit — revenue minus business expenses.
- Deduct all legitimate business expenses first; they reduce both SE and income tax.
- Add other household income, which affects your income tax bracket.
- Use the quarterly figure for estimated tax payments.
Smart tips
- Estimated taxes are due 15 April, 15 June, 15 September and 15 January. Missing them incurs penalties.
- A SEP-IRA or Solo 401(k) lets you shelter far more than a regular IRA — up to $72,000 for 2026.
- The home office deduction, health insurance premiums and half of SE tax are all valuable freelancer deductions.
- An S-corp election can reduce SE tax on distributions once profit consistently exceeds roughly $80–100k, but adds payroll and compliance costs.
- Set aside 25–30% of every payment received so the quarterly bill is never a shock.
Frequently asked questions
What is the self-employment tax rate?
15.3% — 12.4% Social Security up to the wage base plus 2.9% Medicare — applied to 92.35% of net profit.
When are quarterly estimated taxes due?
15 April, 15 June, 15 September and 15 January of the following year.
Can I deduct self-employment tax?
You can deduct half of it against income tax, which partially offsets paying both halves of FICA.
How much should I set aside for taxes?
25–30% of net profit is a reasonable rule for most freelancers, higher if you are in a top bracket or a high-tax state.
Want the theory behind the numbers? Browse the Money Blog for worked guides.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: IRS — Topic no. 751: 6.2% Social Security and 1.45% Medicare rates and the wage base, IRS — self-employment tax: 15.3% combined rate. How we check these numbers.