When you work for yourself there is no employer to pay half of your Social Security and Medicare taxes, so you pay both halves through self-employment (SE) tax on Schedule SE.
Who pays it
You owe SE tax if your net earnings from self-employment are $400 or more. This includes freelancers, independent contractors (Form 1099-NEC), sole proprietors, single-member LLC owners and active partners.
The rates
| Part | Rate | Applies to |
|---|---|---|
| Social Security | 12.4% | Net earnings up to $184,500 in 2026 ($176,100 in 2025), reduced by any W-2 Social Security wages |
| Medicare | 2.9% | All net earnings, no cap |
| Additional Medicare | 0.9% | Earnings above $200,000 single, $250,000 joint, $125,000 married filing separately (Form 8959) |
How to calculate it
- Start with net profit from Schedule C (or partnership K-1).
- Multiply by 92.35% to get net earnings from self-employment.
- Apply 15.3% (12.4% only up to the wage base).
- Deduct half of the SE tax as an adjustment to income on Schedule 1.
Example: $60,000 net profit x 92.35% = $55,410. SE tax = $55,410 x 15.3% = $8,478. Half, $4,239, is deducted from your income, which lowers your income tax (but not the SE tax itself).
Ways to reduce it legally
- Claim every ordinary and necessary business expense on Schedule C.
- Consider an S-Corp election once profit is high enough to pay yourself a reasonable salary (see LLC vs S-Corp vs C-Corp).
- Fund a SEP-IRA or solo 401(k): it lowers income tax, though not SE tax.
SE tax is not withheld, so most self-employed people pay it through quarterly estimated taxes.
See your SE tax, income tax and state tax together.
Calculate my taxesOfficial sources
- IRS: Self-employment tax (Social Security and Medicare taxes)
- IRS: About Schedule SE
- SSA: Contribution and benefit base
Educational information, not tax advice.
More guides
- How to file Form 1040 yourself for free (2026 guide)
- LLC vs S-Corp vs C-Corp: how each is taxed in 2026
- Quarterly estimated taxes: 2026 due dates, safe harbor and how to pay
- State income tax by state: 2026 overview of rates and no-tax states
- New deductions for 2025-2028: no tax on tips, overtime, seniors and car loan interest