Key takeaways
- You owe SE tax and must file Schedule SE if your net earnings from self-employment are $400 or more.
- The Social Security part applies only up to the 2026 wage base of $184,500 (combined with any W-2 wages). Medicare has no cap.
- An extra 0.9% Additional Medicare Tax applies above $200,000 (single) or $250,000 (married filing jointly).
- You can deduct half of your SE tax as an adjustment to income, which lowers income tax but not SE tax itself.
What is self-employment tax?
When you’re an employee, Social Security and Medicare (FICA) taxes are split: you pay 7.65% through withholding and your employer pays a matching 7.65%. When you work for yourself, you’re both the employee and the employer, so you pay both halves. That combined bill is self-employment (SE) tax.
It applies to freelancers, independent contractors, sole proprietors and partners in a business. It’s separate from income tax, which means you can owe SE tax even in a year when your income is too low to owe any income tax.
Log the deductible expenses that lower your self-employment tax with the Manage Receipt app.
Rate and components
| Part | Rate | Applies to (2026) |
|---|---|---|
| Social Security | 12.4% | Net SE earnings up to $184,500, minus any W-2 wages already taxed |
| Medicare | 2.9% | All net SE earnings, no cap |
| Total | 15.3% | Up to the wage base; 2.9% above it |
| Additional Medicare Tax | 0.9% | Earnings above $200,000 single, $250,000 married filing jointly, $125,000 married filing separately |
The Social Security wage base changes every year with national wages. It was $176,100 in 2025 and is $184,500 in 2026, per the Social Security Administration.
How self-employment tax is calculated
- Find net profitGross income minus business expenses, from Schedule C line 31.
- Multiply by 92.35%This mirrors the employer half that employees never see in their pay.
- Apply 15.3%Or 12.4% + 2.9% split, with the Social Security part capped at the wage base.
- Deduct halfHalf of the SE tax is an adjustment to income on Schedule 1.
You calculate it on Schedule SE and carry the result to your Form 1040. If you have more than one business, combine their net profits and losses first. If you also earn W-2 wages, those wages use up part of the Social Security wage base before your self-employment earnings do, which matters only once your combined earnings approach $184,500.
How expenses reduce self-employment tax
SE tax is figured on profit, not on what clients paid you. That makes every deductible expense worth roughly 14.1% in SE tax savings (15.3% × 92.35%), on top of the income tax it saves.
Jordan is a freelance web developer with $80,000 of 1099 and direct client income in 2026 and no W-2 job. During the year Jordan spent $12,000 on software, a new laptop, coworking and business travel.
| No expenses tracked | $12,000 tracked | |
|---|---|---|
| Net profit | $80,000.00 | $68,000.00 |
| × 92.35% = net SE earnings | $73,880.00 | $62,798.00 |
| × 15.3% = SE tax | $11,303.64 | $9,608.09 |
| Half deductible from income | $5,651.82 | $4,804.05 |
Tracking the $12,000 cuts Jordan’s SE tax by $1,695.55. The lower profit also reduces income tax, so the total saving is larger. Both columns are below the $184,500 wage base, so the full 15.3% applies.
The deduction only holds if you can prove it. Keep receipts and, for meals and travel, a note of the business purpose. Our list of common business expenses is a good place to check what you might be missing.
Paying self-employment tax quarterly
No one withholds SE tax for you, so it’s paid along with income tax through quarterly estimated payments. For 2026 the due dates are April 15, June 15 and September 15, 2026, and January 15, 2027. If you also have a W-2 job, you can increase your paycheck withholding to cover it instead.
SE tax counts toward your Social Security record. Lower SE earnings mean lower tax today but also smaller credited earnings for future benefits. Claim every legitimate expense, but don’t skip reporting income to save SE tax.
Every scanned receipt trims your SE tax
Because self-employment tax is based on net profit, a receipt you forget to claim costs you about 14 cents per dollar in SE tax alone. Manage Receipt scans receipts the moment you get them, categorizes them and rolls them into an AI tax report, so the expenses that lower your Schedule C profit are all accounted for.
Explore AI Tax ReportsFrequently asked questions
How much is self-employment tax?
Self-employment tax is 15.3% of 92.35% of your net profit: 12.4% for Social Security up to the 2026 wage base of $184,500, plus 2.9% for Medicare on all earnings. An extra 0.9% Medicare tax applies above $200,000 for single filers or $250,000 for joint filers.
Do business expenses reduce SE tax?
Yes. SE tax is calculated on net profit from Schedule C, which is income minus deductible business expenses. Each dollar of documented expenses lowers SE tax by about 14 cents, plus the income tax saved at your bracket. Personal costs and the QBI deduction don’t reduce it.
What is the Social Security wage base for 2026?
The 2026 Social Security wage base is $184,500, up from $176,100 in 2025. Only net self-employment earnings and wages up to that amount are subject to the 12.4% Social Security part of SE tax. The 2.9% Medicare part applies to all earnings, with no cap.
Do I pay self-employment tax if I also have a W-2 job?
Yes, on your self-employment profit if net SE earnings are $400 or more. Your W-2 wages count toward the Social Security wage base first, so if wages plus SE earnings exceed $184,500 in 2026, the 12.4% part stops at the cap. Medicare still applies.
Is self-employment tax deductible?
Half of it is. You deduct the employer-equivalent half of your SE tax as an adjustment to income on Schedule 1, which lowers your income tax. It doesn’t reduce the SE tax itself or your Schedule C profit, so documented business expenses remain the only way to shrink the SE tax bill.