What is the self-employment tax rate for 2026?

The self-employment tax rate is 15.3% — that's 12.4% for Social Security plus 2.9% for Medicare. You pay it on net self-employment earnings (Schedule SE), which is gross business income minus business expenses. The 12.4% Social Security half stops applying once your combined wages plus SE earnings exceed $184,500 (the 2026 wage base). The 2.9% Medicare half keeps applying with no upper limit. Above $200,000 single / $250,000 MFJ, an additional 0.9% Medicare surtax applies, bringing the top SE rate on Medicare to 3.8% on the excess.

Why is SE tax so high — 15.3% feels punishing

Because as a self-employed person you pay both halves of FICA: the employee 7.65% (SS 6.2% + Medicare 1.45%) AND the 'employer' 7.65% match. W-2 employees only see their half on the paycheck; the employer pays the other half separately. Self-employed people pay the full 15.3% themselves. The IRS partially compensates by letting you deduct half of SE tax as an above-the-line adjustment to income, but you still pay the full 15.3% in cash up front and recover only ~10-37% of half of it via federal income tax savings.

Do I owe self-employment tax on every dollar of business income?

No — only on net SE earnings, which is gross business income minus business expenses (Schedule C line 31), then multiplied by 92.35% (the IRS rounds out a small adjustment to align with employer-half deduction). So $100,000 in net business profit becomes $92,350 of net SE earnings × 15.3% = $14,130 of SE tax. Plus, you owe nothing if net SE earnings are under $400 for the year. And the 12.4% Social Security half stops once you cross the $184,500 wage base.

How is SE tax different from FICA?

Same underlying taxes (Social Security + Medicare), different paying mechanism. FICA is the W-2 employee version: 7.65% withheld from your paycheck (your half), with the employer paying another 7.65% separately (their half). SE tax is the self-employed equivalent: you pay all 15.3% yourself on Schedule SE. The end-state revenue to Social Security and Medicare is identical — both routes collect 15.3% per dollar of earned income. The big difference at tax time: W-2 employees never see the employer-half cost on their paycheck; SE workers feel both halves directly.

When do I pay SE tax — quarterly or at filing?

Quarterly via Form 1040-ES estimated tax payments. The IRS expects you to pay SE tax (plus federal income tax) throughout the year, not in a lump sum at filing. Quarterly due dates: April 15, June 15, September 15, January 15 (of the following year). If you owe more than $1,000 at filing, the IRS charges underpayment-penalty interest unless you used a 'safe harbor' (paid at least 90% of current-year tax OR 100% of prior-year tax, 110% if prior-year AGI was over $150K). Many SE workers set aside 25-30% of every payment received to cover SE tax + federal + state.

Can I reduce SE tax by maxing my retirement contributions?

Partially. Solo 401(k) and SEP IRA contributions are deductible from federal income tax but NOT from SE tax. Your SE tax is calculated on net SE earnings BEFORE retirement contributions — so contributing $20,000 to a Solo 401(k) saves you federal income tax but doesn't reduce the 15.3% SE tax bill. Health insurance premiums for self-employed (deductible above-the-line on Schedule 1) ALSO don't reduce SE tax. The only deductions that reduce SE tax are business expenses on Schedule C — so legitimate business deductions are doubly valuable.

Should I form an S-corp to reduce SE tax?

Probably yes if your net SE income is above $80,000-$100,000/yr and stable. With S-corp election (Form 2553), you split income into W-2 salary (subject to FICA, SE-tax equivalent) and distributions (NOT subject to FICA/SE tax). A typical split: 30-50% as W-2 salary, the rest as distributions. On $150K net business income, splitting 40/60 saves roughly 15.3% × $90K = $13,770/yr in SE tax. Caveats: (1) the IRS requires 'reasonable compensation' as W-2 — too low triggers audits; (2) you add payroll-processing overhead, state corporate filings, and additional CPA fees ($1,500-$3,000/yr typical); (3) only Schedule C sole proprietors and single-member LLCs benefit; partnerships/multi-member LLCs are different.

Does SE tax apply to passive income like rental properties or dividends?

No. SE tax applies only to ACTIVE earned income from self-employment — Schedule C profits, partnership Schedule K-1 box 14 SE earnings, single-member LLC profits. Passive income that doesn't owe SE tax: rental property income (Schedule E), dividends, interest, capital gains, royalties (most of the time), pension/IRA distributions. This is why real estate investors and passive K-1 partners can have very high incomes without SE tax exposure. The catch: 'real estate professional' status under IRC §469 lets you treat rental income as active for some purposes but doesn't make it SE-taxable.

Updated for 2026

Self-Employment Tax Rate

15.3% combined: 12.4% Social Security (capped at $184,500) plus 2.9% Medicare (uncapped). Half is deductible. Plus 0.9% extra Medicare over $200K/$250K.

2026 SE Tax Key Numbers

Combined Rate

15.3%

Social Security Half

12.4%

Medicare Half

2.9%

SS Wage Base

$184,500

12.4% Social Security stops at $184,500 of combined wages + SE earnings. 2.9% Medicare keeps applying on every dollar. Above $200K single / $250K MFJ, add 0.9% Additional Medicare. You can deduct half of regular 15.3% above-the-line on Schedule 1.

Source: IRS Self-Employment Tax · §1401-1403 of the Internal Revenue Code · Form Schedule SE.

What is the self-employment tax?

Self-employment tax is the equivalent for people without an employer to withhold their share. employees pay 7.65% through paycheck withholding (Social Security 6.2% + Medicare 1.45%); their employer pays another 7.65% separately. Self-employed people pay both halves themselves — 15.3% combined — directly on Schedule SE filed with their federal tax return.

The base SE tax has two components: 12.4% Social Security on net SE earnings up to the wage base ($184,500 for 2026, indexed annually) plus 2.9% Medicare with no upper limit. Above $200,000 (single) / $250,000 (), an additional 0.9% Medicare surtax kicks in (the same Additional Medicare Tax that hits high-earner wages).

To partially offset paying both halves, the IRS lets you deduct half of regular SE tax as an above-the-line adjustment on Schedule 1 — saving 10-37% of that amount in federal income tax depending on your bracket. The 0.9% Additional Medicare is never deductible. SE tax applies to active earned income (Schedule C profits, partnership SE earnings) — not to passive income like rentals, dividends, or capital gains.

How SE tax is calculated

SCHEDULE SE STEP-BY-STEP

1.Start with net business profit from Schedule C (gross income minus business expenses).
2.Multiply by 92.35% — this gets you "net SE earnings" (the IRS rounding for the employer-half adjustment).
3.If under $400 → no SE tax. Otherwise apply 12.4% Social Security on the lesser of net SE earnings or ($184,500 minus W-2 wages already subject to FICA).
4.Apply 2.9% Medicare on the full net SE earnings (no cap).
5.If net SE earnings exceed $200K (single) / $250K (MFJ), add 0.9% Additional Medicare on the excess via Form 8959.
6.Deduct half of regular SE tax (lines 3+4 only, NOT step 5) above-the-line on Schedule 1.

SE tax wrinkles to plan for

Net SE earnings under $400 — no SE tax owed

If your net self-employment earnings (Schedule SE line 4c) are under $400 for the year, you owe no SE tax at all. The $400 threshold has been frozen for decades, but it still excludes hobby-level side income. Above $400, every dollar of net SE earnings is subject to the full 15.3% SE tax (until you cross the SS wage cap).

Crossing the Social Security wage base ($184,500 in 2026)

Once your combined wages plus SE earnings exceed $184,500 in 2026, the 12.4% Social Security half of SE tax stops applying to additional dollars. The 2.9% Medicare half keeps applying with no cap. So a $300K SE earner pays 15.3% on the first ~$184,500 and just 2.9% on the rest. This is the single biggest math wrinkle for high-earning sole proprietors.

Crossing $200K (single) or $250K (MFJ) — Additional Medicare kicks in

Net SE earnings above the threshold owe an additional 0.9% Medicare tax (for a total of 3.8% Medicare on the excess). The threshold is per-individual for single filers, combined household for . Self-employed people compute and pay this themselves on Form 8959 — there's no payer to withhold it during the year.

Half of SE tax is deductible — but only the regular 15.3%, not the additional 0.9%

The IRS lets you deduct half of your SE tax (the 'employer half' equivalent) as an above-the-line adjustment to income on Schedule 1. This reduces your and federal income tax — typically saving 10-37% of the deducted amount, depending on your bracket. Crucially, the 0.9% Additional Medicare is NOT part of this deduction. The Social Security 12.4% half plus Medicare 2.9% half = 15.3% combined; you deduct half of that 15.3% (i.e., 7.65% of net SE earnings).

S-corp election eliminates SE tax on distributions, not on salary

If you elect S-corporation status (Form 2553) and pay yourself a 'reasonable salary' as wages plus distributions, only the salary owes (the W-2 equivalent of SE tax). Distributions to the owner pass through SE-tax-free. The IRS scrutinizes 'reasonable salary' — too low triggers audits. Most successful shareholders pay 30-50% of net business income as W-2 salary and the rest as distributions. Net SE-tax savings can be $5,000-$15,000+/yr at high incomes, but adds payroll-processing overhead.

Worked examples

Three scenarios show how SE tax stacks across income levels and structures.

EXAMPLE 1 — Freelance designer, $50,000 net Schedule C profit

Net business profit: $50,000
Net SE earnings (× 92.35%): $46,175
Social Security 12.4% × $46,175: $5,726
Medicare 2.9% × $46,175: $1,339
Total SE tax: $7,065
Above-the-line deduction (half of SE tax): −$3,533
Net cost after federal income tax savings (12% bracket): ~$6,641

EXAMPLE 2 — Single consultant, $150,000 net Schedule C profit

Net business profit: $150,000
Net SE earnings (× 92.35%): $138,525
Social Security 12.4% × $138,525 (under $184,500 cap): $17,177
Medicare 2.9% × $138,525: $4,017
Total SE tax: $21,194
Above-the-line deduction: −$10,597
Net cost after federal income tax savings (24% bracket): ~$18,651

At this income, SE tax is the single largest tax bill — bigger than federal income tax. S-corp election would split this differently and save ~$8,000-$12,000/yr (see Example 3).

EXAMPLE 3 — Same $150K but with S-corp election (40/60 salary/distribution split)

W-2 salary to owner (40%): $60,000
FICA on salary (12.4% SS + 2.9% Medicare = 15.3% × $60,000): $9,180
S-corp distribution to owner (60%, no FICA/SE tax): $90,000
Total payroll/SE-tax cost: $9,180
Savings vs Schedule C ($21,194): −$12,014
Less S-corp overhead (~$2,500/yr CPA + payroll service): ~$2,500
Net annual S-corp savings: ~$9,514

The IRS requires "reasonable compensation" as W-2 salary — too low triggers audits. Most S-corps pay 30-50% of net business income as W-2 salary. Always consult a CPA on the salary level.

SE tax vs FICA — same taxes, different paths

	W-2 Employee (FICA)	Self-Employed (SE Tax)
Total rate (employee + employer)	15.3% (split 7.65% / 7.65%)	15.3% (you pay all)
Visible on paycheck/return	Your 7.65% only (FICA box)	Full 15.3% (Schedule SE)
Social Security wage base	$184,500 (2026)	$184,500 (combined w/ wages)
Medicare cap	None (1.45% employee + 1.45% employer)	None (full 2.9% on all earnings)
Above-the-line deduction	None (employer half not on your return)	Half of regular 15.3%
When paid	Each paycheck (withheld)	Quarterly estimated tax + filing
Form to compute	W-2 / Form 8959 (high earners)	Schedule SE / Form 8959

Calculate your SE tax in context

SE tax stacks with federal income tax, state tax, retirement contributions, and quarterly estimated payments. The freelancer calculator runs the full picture for your business income, expenses, and filing status.

Freelancer / 1099 calculator →SEP IRA (self-employed retirement) →Solo 401(k) →Medicare tax rate →

Self-Employment Tax FAQ

Sources & Methodology

Tax rates and thresholds reflect 2026 federal law. Self-employment tax computations follow Schedule SE (Form 1040). Combined SS + Medicare rate of 15.3% breaks down as 12.4% Social Security (capped at the 2026 wage base) plus 2.9% Medicare (uncapped) plus the 0.9% Additional Medicare Tax above $200K single / $250K MFJ thresholds (set by the Affordable Care Act in 2010, not indexed for inflation).

IRS — Self-Employment Tax (Social Security and Medicare Taxes)
IRS Schedule SE (Form 1040) — Self-Employment Tax
IRS Publication 334 — Tax Guide for Small Business
IRS Topic No. 554 — Self-Employment Tax
SSA — Contribution and Benefit Base (Wage Base History)
Internal Revenue Code §1401 (self-employment tax), §1402(a) (definition of net earnings from self-employment), §164(f) (deduction for half of SE tax).