The rate
The combined rate is 15.3%, made up of:
- 12.4% Social Security on net earnings up to the annual wage base: $176,100 for 2025 and $184,500 for 2026, per the IRS.
- 2.9% Medicare on all net earnings, with no cap.
An Additional Medicare Tax of 0.9% applies on earnings above certain thresholds ($200,000 for single filers, $250,000 for married filing jointly).
Who must pay it?
You generally owe SE tax if your net earnings from self-employment were $400 or more. That includes sole proprietors, independent contractors, freelancers, gig workers and partners in partnerships. If your net earnings are under $400, no SE tax is due (though you may still report income).
How to calculate it
- Compute net profit on Schedule C (income minus business expenses).
- Multiply net profit by 92.35%. This approximates the employer-equivalent adjustment.
- Apply the rates: 12.4% up to the wage base (reduced by any wages you also earned from an employer that were subject to Social Security tax) and 2.9% on the full amount.
- Report it on Schedule SE and carry it to Schedule 2 and Form 1040.
Example
Suppose a freelancer has $50,000 of net profit in 2025. 92.35% of that is $46,175. Multiply by 15.3% to get about $7,065 of SE tax. (Illustration; this ignores W-2 wages and other factors.)
The deduction for half of SE tax
You can deduct half of your SE tax as an adjustment to income on Form 1040, which reduces your income tax (but not the SE tax itself). In the example, that’s about $3,533. This approximates the employer-side tax that employees’ employers pay.
SE tax vs. income tax
| Feature | Income tax | SE tax |
|---|---|---|
| Funds | General government | Social Security and Medicare |
| Rates | 10%–37% brackets | 15.3% (12.4% + 2.9%) |
| Standard deduction applies? | Yes | No |
| Based on | Taxable income | 92.35% of net self-employment earnings |
Also have a W-2 job?
If you have both W-2 wages and self-employment income, your wages count toward the Social Security wage base, so you may pay less Social Security tax on the self-employment portion if your wages are high. Schedule SE handles this.
Reducing SE tax legitimately
- Deduct all legitimate business expenses.
- Keep good records.
- Consider an S corporation only with professional advice; it has costs and rules (reasonable salary requirements).
Paying SE tax during the year
Because no one withholds it, SE tax is included in your quarterly estimated payments. See how to pay estimated taxes.
Frequently asked questions
What is the self-employment tax rate?
15.3%: 12.4% for Social Security (up to the wage base) and 2.9% for Medicare.
Do I owe SE tax on small side income?
Yes, if net earnings from self-employment are $400 or more.
Can I deduct self-employment tax?
You can deduct half of it as an adjustment to income.
Official sources
- IRS: Self-employment tax
- IRS Topic 554: Self-employment tax
- IRS: About Schedule SE
- IRS: Self-Employed Individuals Tax Center
- IRS Publication 15 (Circular E): Employer’s Tax Guide
General information only — not tax, legal or financial advice. Tax figures change every year; verify the current numbers at IRS.gov or with a qualified professional. Read the full disclaimer.