How to calculate self-employment tax (2026)

How do I calculate self-employment tax?

Multiply your net profit by 92.35%, then multiply that by 15.3%. The IRS sets the rate at 15.3%: 12.4% for Social Security plus 2.9% for Medicare (IRS), and generally only 92.35% of net earnings is subject to it (IRS Topic 554). That works out to about 14.13% of profit. For 2026 the 12.4% part stops once your combined wages and net earnings reach $184,500; the 2.9% part has no cap. You owe it, and file Schedule SE, if net earnings are $400 or more, and you can deduct half of it when figuring adjusted gross income.

Formula: SE tax = (net profit × 92.35%) × 15.3%, with the 12.4% Social Security part applied only up to $184,500 (2026).

Worked example: $40,000 net profit × 92.35% = $36,940.00; × 15.3% = $5,651.82 self-employment tax. Half of that, $2,825.91, is deductible in figuring AGI.

Last verified November 3, 2026 against IRS: Self-employment tax (Social Security and Medicare taxes), IRS Topic no. 554, Self-employment tax. Fee change tracker · How we verify

Step by step

Net profit. Business income minus ordinary and necessary business expenses. For a sole proprietor or single-member LLC that is usually the bottom line of Schedule C. Fees taken by Etsy, Stripe, Square or PayPal are expenses, so subtract them first (see what to do with a 1099-K).
Net earnings from self-employment = net profit × 92.35%.
Check the $400 rule. The IRS says you must pay SE tax and file Schedule SE if net earnings from self-employment were $400 or more.
Social Security part: 12.4% of net earnings, but only on the amount that, added to any W-2 wages subject to Social Security tax, stays within $184,500 for 2026.
Medicare part: 2.9% of all net earnings, no cap.
Add them. That's your self-employment tax, reported on Schedule SE and carried to Form 1040.
Deduct half when figuring adjusted gross income. The IRS says this lowers your income tax only; it doesn't change net earnings or the SE tax itself.

Worked examples (2026, no W-2 wages)

Net profit	× 92.35%	Social Security 12.4%	Medicare 2.9%	SE tax	Half deductible
$10,000	$9,235.00	$1,145.14	$267.82	$1,412.96	$706.48
$40,000	$36,940.00	$4,580.56	$1,071.26	$5,651.82	$2,825.91
$80,000	$73,880.00	$9,161.12	$2,142.52	$11,303.64	$5,651.82
$200,000	$184,700.00	$22,878.00	$5,356.30	$28,234.30	$14,117.15

Arithmetic of the IRS rule for illustration only, not your tax bill. At $200,000 profit, net earnings are $184,700.00, so the 12.4% part is only charged on the first $184,500 and SE tax is $28,234.30, not $28,259.10. Income tax is a separate amount on top.

If you also have a W-2 job

The $184,500 limit is for combined wages, tips and net earnings. The IRS says that if your wages subject to Social Security tax already total at least $184,500, you don't pay the 12.4% part on any net earnings, but the 2.9% Medicare part still applies to all of them. Example: $170,000 in W-2 wages plus $30,000 side profit gives $27,705.00 of net earnings; only $14,500 of that is still under the cap, so SE tax is $1,798.00 + $803.45 = $2,601.45.

Additional Medicare Tax

Separately, an additional 0.9% Medicare Tax applies to wages and self-employment income above $250,000 joint, $125,000 married separate, $200,000 all others (IRS Topic 554). It is figured on Form 8959, not on Schedule SE, so it isn't in the table above.

What self-employment tax is not

Not your whole tax bill. Federal income tax (2026 rates 10% to 37%) and any state tax come on top. See how much a freelancer should set aside.
Not paid once a year if you'll owe $1,000+. It goes into your quarterly estimated payments; see the 2026 estimated tax dates.
Not charged on gross sales. It starts from profit, which is why tracking fees, mileage (2026 rates) and other expenses matters.

Questions

What is the self-employment tax rate for 2026?

15.3%: 12.4% Social Security and 2.9% Medicare, per the IRS. The Social Security part applies to the first $184,500 of combined wages, tips and net earnings in 2026.

Is self-employment tax 15.3% of all my income?

No. It is charged on net earnings, which the IRS generally figures as 92.35% of net profit (income minus business expenses). That makes it about 14.13% of profit below the Social Security cap.

What is the formula for self-employment tax?

SE tax = net profit × 92.35% × 15.3%, with the 12.4% part capped at $184,500 of combined wages and net earnings for 2026. Example: $40,000 profit × 0.9235 × 0.153 = $5,651.82.

Do I have to pay self-employment tax on a small side income?

The IRS says you must pay SE tax and file Schedule SE if your net earnings from self-employment were $400 or more.

Can I deduct self-employment tax?

You can deduct half of it when figuring adjusted gross income on Form 1040, per IRS Topic 554. The deduction reduces income tax only, not the SE tax itself.

Does the 0.9% Additional Medicare Tax go on Schedule SE?

No. It applies above $250,000 joint, $125,000 married separate, $200,000 all others and is figured on Form 8959.

Is this tax advice?

No. It shows the IRS rule and arithmetic. Your return may differ; ask a tax professional before relying on a number.

General information, not tax, legal or accounting advice. Rates change: check the linked official source before you rely on a number. Not yet reviewed by a CPA or EA.