Estimate US self-employment tax (Social Security + Medicare) on net earnings.
SE tax ≈ net earnings × 92.35% × 15.3% (12.4% Social Security + 2.9% Medicare). The Social Security portion caps at an annual wage base not modeled here.
Illustrative estimate only — tax rules change frequently and vary by jurisdiction/circumstance. Verify with an accountant or official source before relying on this.
Self-employment tax in the US covers the same two programs — Social Security and Medicare — that regular employees fund through payroll withholding, but the mechanics differ in a way that catches many new freelancers off guard. A W-2 employee pays 7.65% (6.2% Social Security + 1.45% Medicare) while their employer matches it with another 7.65%, for a combined 15.3% that the employee never sees as a single line item. A self-employed person is both the "employer" and "employee" in the eyes of the IRS, so they owe the full 15.3% themselves — not because self-employment is taxed at a punitive extra rate, but because there's no employer half to split it with.
The 12.4% Social Security portion only applies up to a wage base cap — $184,500 for 2026 — above which no further Social Security tax is owed on self-employment earnings; the 2.9% Medicare portion has no cap at all and applies to every dollar of self-employment income. High earners face one more layer: an Additional Medicare Tax of 0.9% kicks in once combined wages and self-employment income exceed $200,000 for single filers or $250,000 for married filing jointly. There is a genuine partial offset worth knowing: you can deduct half of your self-employment tax as an above-the-line deduction on Schedule 1, which reduces your adjusted gross income (and therefore your income tax) — though it's worth being precise that this deduction lowers taxable income, it does not reduce the self-employment tax itself, which is calculated and owed in full regardless.
Because a traditional employee's 7.65% (Social Security + Medicare) is matched by an equal 7.65% employer contribution that never appears on the employee's pay stub — the combined true cost is already 15.3%. A self-employed person is both employer and employee for tax purposes, so they owe the full 15.3% themselves rather than splitting it with a separate employer.
No — the 12.4% Social Security portion applies only up to a wage base cap ($184,500 for 2026); earnings above that cap owe no additional Social Security tax. The 2.9% Medicare portion, by contrast, has no cap at all and applies to every dollar of self-employment income.
Yes — you can deduct half of your self-employment tax as an above-the-line deduction on Schedule 1, which reduces your adjusted gross income and therefore your income tax. It's worth being precise, though: this deduction lowers your taxable income, it does not reduce the self-employment tax itself, which is still owed in full.
An extra 0.9% Medicare tax that applies once your combined wages, compensation and self-employment income exceed $200,000 (single filers) or $250,000 (married filing jointly). It's layered on top of the standard 2.9% Medicare portion of self-employment tax, specifically targeting higher earners.