How self-employment tax is calculated
Schedule SE starts from your net profit, which is your business income minus business expenses. It multiplies the profit by 92.35% to get your net earnings from self-employment. If that is under $400, you owe no self-employment tax. Otherwise you pay 12.4% for Social Security and 2.9% for Medicare on the net earnings.
Example: a freelancer with $60,000 of profit in 2026 has $55,410 of net earnings. Social Security is $6,870.84 and Medicare is $1,606.89, so the self-employment tax is $8,477.73. Half of it, $4,238.87, is deducted from income on Schedule 1, which lowers income tax but not the self-employment tax itself.
Self-employment tax rates and limits for 2026
| Part | Rate | Applies to |
|---|---|---|
| Social Security | 12.4% | The first $184,500 of wages and net earnings combined |
| Medicare | 2.9% | All net earnings, no limit |
| Additional Medicare Tax | 0.9% | Earnings over $200,000 single or head of household, $250,000 joint, $125,000 separate |
| Minimum | None owed | Net earnings under $400 (under about $434 of profit) |
The Additional Medicare Tax is figured on Form 8959, not Schedule SE, and no part of it is deductible. Its threshold is reduced by any W-2 wages you and, on a joint return, your spouse earned.
Self-employment tax when you also have a W-2 job
Your job already paid Social Security tax on your wages, and the $184,500 limit covers wages and self-employment earnings together. So your wages use up part of the limit, and only the rest of it is taxed at 12.4%. Medicare has no limit, so the 2.9% applies to all of your net earnings.
Example: with $150,000 of wages and $50,000 of side-business profit, only $34,500 of the $46,175 in net earnings is left under the limit. Social Security is $4,278, Medicare is $1,339.08, and the total is $5,617.08 instead of $7,064.78. To see income tax as well, use the 1099 tax calculator.
Questions
What is the self-employment tax rate for 2026?
It is 15.3% of 92.35% of your net profit: 12.4% for Social Security on up to $184,500 of combined wages and earnings, and 2.9% for Medicare with no limit.
Do I pay self-employment tax and income tax?
Yes. Self-employment tax is figured on Schedule SE and added to your federal income tax, which is figured on the same profit after deductions.
How much do you have to make to pay self-employment tax?
You owe it when your net earnings from self-employment, 92.35% of your profit, reach $400. That works out to about $434 of profit.
Can I deduct self-employment tax?
You deduct half of it from your income on Schedule 1 (Form 1040). That lowers your income tax but not the self-employment tax itself.
Do I pay self-employment tax if I also have a W-2 job?
Yes. Your wages count toward the $184,500 Social Security limit, so you may owe less of the 12.4% part, but the 2.9% Medicare part applies to all of your net earnings.
When is self-employment tax paid?
It goes into your quarterly estimated tax payments with income tax. For 2026 they are due April 15, June 15 and September 15, 2026, and January 15, 2027.
Sources
- IRS: Self-employment tax (Social Security and Medicare taxes)
- IRS: Schedule SE (Form 1040), 2026
- IRS: Instructions for Form 8959 (Additional Medicare Tax)
- IRS: Form 1040-ES, 2026 (estimated tax)
Updated November 4, 2026. Estimates only, not tax or financial advice.