Tax
Calculate your total SE tax for Social Security and Medicare
Enter your net self-employment income to see your obligations.
Self-employment tax is a federal tax that covers Social Security and Medicare contributions for people who work for themselves. Unlike traditional employees who split these taxes with employers (7.65% each), self-employed individuals pay both portions themselves (15.3% total). This tax applies to net earnings from self-employment of $400 or more per year. Self-employed people include freelancers, consultants, business owners, and independent contractors. The tax funds your Social Security retirement, disability, and survivor benefits, plus Medicare health insurance coverage. Understanding self-employment tax is crucial for budgeting, setting aside funds, and properly filing your annual tax return.
To calculate self-employment tax, start with your net profit from self-employment income (business income minus business expenses). Multiply this by 92.35% to get your net self-employment income, which accounts for the employer-equivalent deduction. Next, apply the 15.3% self-employment tax rate to this figure. The result is your self-employment tax. You can deduct half of this amount as an adjustment to income on your tax return. Additionally, if you earn more than $200,000 (single) or $250,000 (married), you're subject to an additional 0.9% Medicare tax on excess income.
Self-Employment Tax = (Net Profit × 0.9235) × 0.153. The deductible portion is: (Self-Employment Tax × 0.50). Additional Medicare Tax applies to earnings exceeding $200,000 (single) or $250,000 (married filing jointly) at 0.9% rate.
Yes, if your net self-employment income is $400 or more in a tax year, you must file Schedule SE and pay self-employment tax. This applies even if you have a primary job as a W-2 employee. The income thresholds are cumulative across all self-employment activities.
Self-employment tax is calculated on your net profit, which is after business expenses. So yes, deducting legitimate business expenses like home office, supplies, equipment, and vehicle mileage reduces your net profit and therefore your self-employment tax liability.
Self-employment tax funds Social Security and Medicare (15.3% of net profit). Income tax is separate and based on your total income minus deductions, with rates from 10% to 37%. You must pay both, but they're calculated differently and appear on separate forms.
Estimated tax payments for self-employed individuals are due April 15, June 15, September 15, and January 15 of the following year. Use Form 1040-ES to calculate payments. Failing to pay on time may result in penalties and interest.
