Self-Employment Tax Explained With Real Numbers
General information for US federal taxes, tax year 2026. Not tax advice. Verify figures on IRS.gov.
Self-employment (SE) tax is how freelancers pay into Social Security and Medicare. Employees pay half of these taxes and their employer pays the other half. When you work for yourself, you pay both halves.
The rate
The IRS puts the rate at 15.3 percent: 12.4 percent for Social Security and 2.9 percent for Medicare. Two details change how much that is in practice:
- The 92.35 percent rule. The tax is calculated on 92.35 percent of your net profit, which is a stand-in for the employer half you would not owe as an employee.
- The Social Security cap. The 12.4 percent part applies only up to an annual wage base (the calculator on this site uses $184,500 for 2026). Above it, only the 2.9 percent Medicare part continues. A higher-income additional Medicare tax can also apply; we leave that out.
Three examples (2026 figures, SE tax only)
| Net profit | × 92.35% | Social Security 12.4% | Medicare 2.9% | SE tax | Share of profit |
|---|---|---|---|---|---|
| $40,000 | $36,940 | $4,581 | $1,071 | $5,652 | 14.1% |
| $80,000 | $73,880 | $9,161 | $2,143 | $11,304 | 14.1% |
| $200,000 | $184,700 | $22,878 (cap applies) | $5,356 | $28,234 | 14.1% |
At very high profit the share falls, because only Medicare applies above the cap.
You can deduct half
Half of your SE tax is deductible when calculating adjusted gross income for income tax. In the $80,000 example, that is $5,652 off your income. This is built into our tax set-aside calculator and shown step by step in the worked example.
Do I owe it on small amounts?
Generally you owe SE tax if your net earnings from self-employment are $400 or more. Check the IRS page for the current rule.
Why it surprises new freelancers
On an $80,000 profit, SE tax alone is about $11,300, before any income tax. People who budget only for income tax tend to come up short. Pay it through your quarterly estimated payments.
Lowering the base
SE tax is charged on profit, so legitimate business expenses reduce it. Keep records; see the list in our tax guide. Some freelancers explore an S corporation to change how income is taxed; see sole proprietor vs LLC vs S corp for the trade-offs, and ask a professional first.