Self-employment tax explained
What self-employment tax is, the 2026 rate and wage base, how to calculate it on Schedule SE, and how to reduce what you owe legally.
Self-employment (SE) tax is how self-employed people pay Social Security and Medicare. Employees split these taxes with their employer; when you work for yourself you pay both halves.
2026 rates
| Part | Rate | Applies to |
|---|---|---|
| Social Security | 12.4% | Net earnings up to $184,500 (2026) |
| Medicare | 2.9% | All net earnings |
| Additional Medicare Tax | 0.9% | Earnings above $200,000 single / $250,000 joint / $125,000 separate |
Worked example
Net profit of $60,000: net earnings = $60,000 × 92.35% = $55,410. SE tax = $55,410 × 15.3% = $8,477.73. You can deduct half ($4,238.87) when calculating adjusted gross income.
SE tax is on top of income tax, which is why many new solopreneurs set aside 25–30% of profit.
Who has to pay
You owe SE tax if your net earnings from self-employment are $400 or more. It's calculated on Schedule SE and paid with Form 1040.
Ways to lower it, legally
- Track every legitimate business expense: SE tax is on profit, not revenue.
- Understand the S corporation election. Once profits are high enough, a reasonable salary plus distributions can reduce SE-type taxes, but it adds payroll costs. Ask a CPA.
Run your numbers: self-employment tax calculator.
Sources: IRS: Self-employment tax · SSA 2026 fact sheet · IRS: Additional Medicare Tax Q&A. General information, not tax advice. Tax reviewer: to be announced.
Frequently asked questions
How much is self-employment tax?
Do I pay self-employment tax under $400?
Sources
- IRS: Self-employment tax irs.gov
- SSA 2026 fact sheet ssa.gov
- IRS: Additional Medicare Tax Q&A irs.gov
Checked 21 Oct 2026. Spotted an error? Tell us.
Update history
- : first published; figures checked against the sources listed.