Your Self-Employment Tax
$10,595
Based on $69,263 of taxable self-employment earnings
| Component | Amount |
|---|
| Social Security (12.4%) | $8,587 |
| Medicare (2.9%) | $2,008 |
| Additional Medicare (0.9%) | $0 |
| Total SE Tax | $10,595 |
| Deductible Half (50%) | $5,298 |
If You Were a W-2 Employee
Here's what the same income would look like under FICA taxes
| Component | Amount |
|---|
| Employee FICA (7.65%) | $5,738 |
| Employer FICA (7.65%) | $5,738 |
| Total FICA (Employee + Employer) | $11,475 |
As a W-2 employee, you would only pay the employee portion directly ($5,738), but your employer would also pay $5,738 on your behalf. Your take-home FICA burden is half of your current SE tax.
How is this calculated?
Self-employment tax is calculated on 92.35% of your net earnings. Social Security (12.4%) applies up to $181,000 of earnings; Medicare (2.9%) applies to all earnings. An additional 0.9% Medicare tax kicks in for income above $200,000 (single) / $250,000 (married filing jointly).
What does this mean for you?
As a self-employed individual, you are responsible for both the employee and employer shares of FICA — totaling 15.3%. However, you can deduct 50% of your SE tax from your income for federal income tax purposes. The W-2 comparison shows that your effective FICA cost is roughly double that of an employee's out-of-pocket expense.
Next Steps
Use our Quarterly Estimated Tax Calculator to determine your total tax payments and avoid underpayment penalties. Consider setting aside at least 25-30% of your net income for taxes.
Understanding Self-Employment Tax
If you work for yourself — as a freelancer, independent contractor, or small business owner — you are responsible for paying self-employment (SE) tax. This tax covers your contributions to Social Security and Medicare, which are normally split between an employee and an employer in traditional W-2 jobs. Since you are both the employer and employee when self-employed, you pay the full 15.3% yourself.
How to Calculate Your SE Tax
The formula is straightforward: multiply your net earnings from self-employment by 92.35% (this accounts for the employer-equivalent portion adjustment). Then apply the 15.3% rate. However, the Social Security portion (12.4%) is capped each year — for 2026, the wage base is projected at $181,000. Medicare (2.9%) continues on all earnings. High earners may also owe an additional 0.9% Medicare tax on income above certain thresholds.
One key benefit: you can deduct 50% of your SE tax on your Form 1040. This deduction reduces your adjusted gross income, lowering the income tax you owe.
How It Compares to W-2 FICA Taxes
When you are a W-2 employee, you and your employer each pay 7.65% of your wages for FICA (6.2% Social Security + 1.45% Medicare). That totals the same 15.3%, but your visible out-of-pocket cost is only half. As a self-employed person, you pay the entire amount directly, but you also gain the ability to deduct half. The net effect on your Social Security and Medicare benefits is the same.
Self-Employment Tax FAQ
How is self-employment tax calculated?SE tax = (Net earnings × 92.35%) × 15.3%. The Social Security portion (12.4%) is capped annually; Medicare (2.9%) has no cap, with an extra 0.9% on high earners.
What is the self-employment tax rate for 2026?The total rate is 15.3% — 12.4% for Social Security and 2.9% for Medicare. An additional 0.9% Medicare surtax may apply on income over $200,000 (single) or $250,000 (married).
How does SE tax compare to W-2 FICA?W-2 employees pay only 7.65% (half), while the employer pays the other half. Self-employed individuals pay both halves (15.3%) but can deduct half from their income tax.
Can I deduct my SE tax?Yes, you can deduct 50% of your SE tax as an above-the-line deduction on Form 1040. This reduces your adjusted gross income.
Is there a maximum amount of SE tax I can pay?Only the Social Security portion is capped (at $181,000 in 2026). The Medicare portion and any Additional Medicare Tax have no ceiling.
When do I have to pay self-employment tax?You pay SE tax as part of your annual tax return, but you likely need to make quarterly estimated tax payments throughout the year to cover both income and SE taxes.