Self-Employment Tax Calculator

How Self-Employment Tax Works

If you're a freelancer, independent contractor, or sole proprietor, you pay self-employment (SE) tax in addition to federal income tax. The SE tax funds Social Security and Medicare — it's the self-employed equivalent of the FICA taxes that W-2 employees and employers split. As a self-employed person, you pay both the employee and employer portions: 15.3% total.

Related: Should you elect S-Corp status to reduce SE tax? Plan your quarterly payments.

The 92.35% Factor Explained

You don't pay 15.3% on your full net profit. First, multiply your net self-employment income by 92.35%. This factor accounts for the fact that employers deduct their half of FICA taxes as a business expense. The IRS effectively lets you subtract the "employer half" before calculating the tax. So if you net $75,000, your SE tax base is $75,000 × 92.35% = $69,263, and your SE tax is $69,263 × 15.3% = $10,597.

Social Security Cap: $184,500 in 2026

The 12.4% Social Security portion only applies to earnings up to the annual wage base — $184,500 in 2026. Earnings above this cap are not subject to Social Security tax, but the 2.9% Medicare tax applies to all self-employment income with no cap. If you also have W-2 wages, the cap applies to your combined W-2 wages and self-employment income. This calculator automatically accounts for W-2 wages when computing the Social Security portion.

Additional Medicare Tax: 0.9%

High earners pay an additional 0.9% Medicare tax on self-employment income (and W-2 wages) above $200,000 (single) or $250,000 (married filing jointly). Unlike the regular 2.9% Medicare tax, there is no employer match for this additional tax — it's paid entirely by the employee/self-employed individual.

2026 SE Tax Quick Reference

* Social Security capped at $184,500 base. Above the cap, only Medicare (2.9%) applies, lowering the effective rate.

The 50% SE Tax Deduction

You can deduct 50% of your self-employment tax as an above-the-line deduction on Schedule 1 (line 15). This reduces your adjusted gross income (AGI), which in turn reduces your federal income tax. This deduction is available to all self-employed taxpayers regardless of whether they itemize or claim the standard deduction. For someone paying $14,130 in SE tax, that's a $7,065 deduction — worth roughly $1,554 in federal income tax savings at a 22% marginal rate.

The QBI Deduction: Extra 20% Off

Most self-employed individuals also qualify for the Qualified Business Income (QBI) deduction under IRC §199A. This lets you deduct up to 20% of your qualified business income on your federal tax return. In this estimate, QBI starts with net self-employment income less the deductible half of SE tax. The deduction is taken after the standard deduction and does not reduce your SE tax — it only reduces your federal income tax. For 2026, the QBI deduction has additional limits above $201,775 (single) or $403,550 (MFJ) of taxable income: this calculator applies the SSTB phase-out when selected and, for non-SSTBs, uses modeled business W-2 wages but no depreciable-property limit.

How to Reduce Your Self-Employment Tax

1. Elect S-Corp status. Once your net profit consistently exceeds $60,000–$80,000, electing S-Corp tax treatment can save thousands by paying FICA only on a reasonable W-2 salary rather than 15.3% on all profits. Use our LLC vs S-Corp calculator to see your potential savings.
2. Maximize business deductions. Every dollar of legitimate business expense reduces your SE tax base. Track home office, mileage, equipment, software, education, and health insurance premiums.
3. Contribute to retirement plans. A Solo 401(k) or SEP IRA reduces your taxable income (though not your SE tax base). For 2026, Solo 401(k) contributions can exceed $60,000 between employee and employer portions.
4. Consider the health insurance deduction. Self-employed individuals can deduct 100% of health insurance premiums for themselves, their spouse, and dependents — above the line, reducing AGI.
5. Hire your spouse or children. Paying family members for legitimate work shifts income to lower tax brackets and reduces your SE tax base.

Quarterly Estimated Taxes

Unlike W-2 employees who have taxes withheld from every paycheck, the self-employed must make quarterly estimated tax payments using Form 1040-ES. If you expect to owe $1,000 or more in tax for the year, you're required to make quarterly payments to avoid an underpayment penalty. The 2026 due dates are: April 15 (Q1), June 15 (Q2), September 15, 2026 (Q3), and January 15, 2027 (Q4). To avoid penalties, pay at least 90% of your current year tax or 100% of your prior year tax (110% if prior-year AGI exceeded $150,000, or $75,000 if married filing separately) — this is called the safe harbor rule.

Common Mistakes

• Forgetting to pay quarterly taxes. The underpayment penalty is currently 8% annualized, compounded daily. Set aside 25–30% of every invoice for taxes.
• Not tracking business expenses. Missing deductions means overpaying SE tax. Use accounting software (QuickBooks, Wave, FreshBooks) from day one.
• Confusing SE tax with income tax. They are separate. Your total tax bill includes both, and the effective rate is often 25–35% of net profit, not just 15.3%.
• Ignoring the Social Security cap. If you have W-2 wages plus self-employment income, you may overpay Social Security tax — claim the excess as a credit on your tax return.
• Failing to make estimated payments after a windfall. If you have an unusually profitable quarter, adjust your next quarterly payment upward to avoid penalties.

Frequently Asked Questions

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