Know your SE tax before it is due.
Enter your net self-employment profit and see the whole picture: your Social Security and Medicare tax, the deductible half, and what to set aside each quarter.
Your numbers
Your net profit: business revenue minus business expenses (Schedule C line 31).
Only affects the 0.9% Additional Medicare tax on high earnings ($200,000 single, $250,000 joint).
What this means for you
What the tax is made of
Social Security vs Medicare
The tax breakdown
SE tax at different profit levels
How the Social Security cap flattens the tax as profit climbs. Your row is highlighted.
| Net profit | Taxable base | Social Security | Medicare | SE tax | Deductible half |
|---|
Self-employment tax, explained
How Self-Employment Tax Works
Self-employment tax is the way freelancers, independent contractors, and sole proprietors pay into Social Security and Medicare. Unlike traditional employees who split FICA taxes with their employer, self-employed individuals pay both the employee and employer portions, totaling 15.3%. The tax is calculated on 92.35% of your net self-employment earnings (revenue minus business expenses), and it applies to anyone who earns $400 or more in net self-employment income per year.
Social Security and Medicare for the Self-Employed
The 15.3% self-employment tax rate breaks down into 12.4% for Social Security and 2.9% for Medicare. The Social Security portion applies only up to the annual wage base limit ($168,600 in 2024), while the Medicare portion has no cap. Self-employed individuals earning more than $200,000 (single) or $250,000 (married filing jointly) also owe an additional 0.9% Medicare surtax on earnings above those thresholds, bringing the Medicare portion to 3.8%.
Deducting Half of Self-Employment Tax
The IRS allows self-employed individuals to deduct the employer-equivalent portion of their self-employment tax (7.65%) as an adjustment to gross income on Form 1040. This deduction is taken on your personal tax return, not on your Schedule C, and it reduces your adjusted gross income (AGI). This above-the-line deduction is available regardless of whether you itemize deductions, and it helps offset the higher tax burden that comes with paying both sides of FICA.
Quarterly Estimated Tax Payments
Self-employed individuals who expect to owe $1,000 or more in taxes are required to make quarterly estimated tax payments to the IRS. These payments are due on April 15, June 15, September 15, and January 15 of the following year. Each payment should cover approximately one-quarter of your expected annual income tax and self-employment tax liability. Failing to make adequate quarterly payments can result in underpayment penalties, even if you pay the full amount owed when filing your return.
Common questions
What is the self-employment tax rate?
The self-employment tax rate is 15.3%, consisting of 12.4% for Social Security (up to $168,600 in 2024) and 2.9% for Medicare. This is calculated on 92.35% of your net self-employment income. You can deduct half of the SE tax from your adjusted gross income.
Why do self-employed people pay more FICA tax?
Employees split FICA taxes with their employer (each pays 7.65%). Self-employed individuals pay both the employee and employer portions (15.3%). However, you can deduct the employer-equivalent portion (7.65%) from your adjusted gross income.
Do I need to make quarterly estimated tax payments?
Yes. If you expect to owe $1,000 or more in taxes, the IRS requires quarterly estimated payments (due April 15, June 15, September 15, and January 15). Missing these deadlines can result in underpayment penalties.
What is the Additional Medicare Tax?
Self-employed individuals earning over $200,000 (single) or $250,000 (married filing jointly) owe an additional 0.9% Medicare tax on income above those thresholds. This brings the Medicare portion to 3.8% on high earnings.
Estimates for planning only, based on 2024 figures. Self-employment tax is separate from federal and state income tax, which you also owe on your profit. Actual liability depends on your full return, other wages subject to Social Security, and current-year limits. Verify with a tax professional before you file.