Self-employment tax guide
Employers withhold Social Security and Medicare taxes for their workers. If you work for yourself, you calculate and pay them on your own, on top of income tax.
Published by Cadus Labs LLC · Last updated November 4, 2026 · How we write these guides
Based on the IRS self-employment tax page and IRS Publication 505 (2026), including the $184,500 wage base for 2026.
Self-employment tax is Social Security and Medicare tax for people who work for themselves. It is similar to what is withheld from an employee's pay, but you figure it yourself on Schedule SE and pay it with your return and your estimated payments.
The rate is 15.3%, made up of two parts. A third, smaller tax applies at high incomes.
| Tax | Rate | Applies to |
|---|---|---|
| Social Security | 12.4% | The first $184,500 of combined wages, tips, and net earnings |
| Medicare | 2.9% | All net earnings |
| Additional Medicare | 0.9% | Income above $200,000 if single or head of household, $250,000 if married filing jointly, $125,000 if married filing separately |
You must pay self-employment tax and file Schedule SE if your net earnings from self-employment were $400 or more. The rule applies at any age, even if you already receive Social Security or Medicare.
If you're a sole proprietor or independent contractor, you generally start with your profit on Schedule C.
The tax applies to 92.35% of your profit, not all of it. Here is the math for $60,000 of net profit, with no wages from a job.
| Step | Amount |
|---|---|
| Net profit from Schedule C | $60,000.00 |
| Net earnings (92.35% of profit) | $55,410.00 |
| Self-employment tax (15.3% of net earnings) | $8,477.73 |
| Deduction for half of the tax | $4,238.87 |
You can deduct the employer-equivalent portion of your self-employment tax when you figure your adjusted gross income. It lowers your income tax. It doesn't lower your net earnings or the self-employment tax itself.
Wages subject to Social Security tax count toward the same $184,500 limit, so they use up room first. If your wages reach $184,500 on their own, you don't pay the 12.4% part on any of your net earnings. You still pay the 2.9% Medicare part on all of them.
Self-employment tax is figured on profit, so a legitimate business expense lowers both this tax and your income tax. An expense you forget to record costs you twice. That is the main reason to record receipts, mileage, and bank transactions as they happen, which is what Cadus is built for.
Calculator
Turn expected profit into a practical tax savings target, then use Cadus to keep income, expenses, deductions, receipts, and reports organized.
Template
Use this worksheet to turn expected monthly profit into a practical tax savings target before estimated tax due dates arrive.
Template
Copy this table to start organizing business purchases, receipt proof, categories, and business purpose before moving records into Cadus.
Estimated tax guide
2026 estimated tax due dates, who has to pay, how to avoid the penalty, and a worked example for a self-employed worker earning $60,000.
Schedule C education
Every Schedule C expense line in plain English: what goes on each one, what doesn't, and the records to keep for self-employed workers.
Gig driver tax guide
What DoorDash, Uber, Lyft, and Instacart drivers report and deduct: 1099 forms, 2026 mileage rates, quarterly taxes, and the records to keep.
The rate is 15.3%: 12.4% for Social Security on up to $184,500 of combined wages, tips, and net earnings, and 2.9% for Medicare on all net earnings.
You must pay it and file Schedule SE if your net earnings from self-employment were $400 or more.
No. It's a separate tax for Social Security and Medicare. Self-employed workers usually owe both, and estimated payments can cover both.
You can deduct the employer-equivalent portion, which is half of the tax, when you figure your adjusted gross income. It reduces your income tax only.