Self-employment tax: rate, who pays, how it's figured

Self-employment tax is the Social Security and Medicare tax for people who work for themselves. An employee splits it with an employer. You pay both halves. It is separate from income tax, and you can owe it even when you owe no income tax.

The rate

The rate is 15.3%. It has two parts:

• 12.4% for Social Security.
• 2.9% for Medicare.

Who pays it

You owe self-employment tax if you are self-employed for this purpose and your net earnings from self-employment, not counting church employee income, were $400 or more. Self-employed for this purpose means:

• Sole proprietors, including independent contractors.
• Partners in a partnership.
• Members of a multi-member LLC that is treated as a partnership for federal tax.
• Owners of a single-member LLC that is disregarded for federal income tax. The IRS treats you as a sole proprietor.

A church employee with $108.28 or more of church employee income also owes it. An LLC that elected to be taxed as a corporation follows the corporation’s rules instead; see the S corporation section below.

If you pay a contractor, they handle their own self-employment tax. See 1099 for contractors.

How it’s figured

1. Start with net earnings from self-employment. That is your business profit, not your sales.
2. Multiply by 92.35%. Generally, that is the amount subject to the tax.
3. Apply the Social Security part up to the yearly base. For 2026, the first $184,500 of combined wages, tips and net earnings is subject to it, raised from $176,100 for 2025. Wages from a job count toward the same base.
4. Apply Medicare to everything. Above the base, only the 2.9% Medicare part applies, and it applies to all of your net earnings.
5. Check the Additional Medicare Tax. A 0.9% tax applies to income above a threshold set by filing status:

Filing status	Threshold
Married filing jointly	$250,000
Married filing separately	$125,000
All other taxpayers	$200,000

You figure the self-employment tax on Schedule SE (Form 1040). The IRS also publishes the Schedule SE instructions.

The half deduction

You can deduct one-half of your self-employment tax when you figure adjusted gross income on Form 1040. The IRS calls it the employer-equivalent portion. It lowers your income tax. It does not lower the self-employment tax. The IRS topic page has the wording.

How you pay it

Nobody withholds it from you. Estimated tax payments can cover it, along with your income tax. The estimated tax rules start at $1,000 owed for the year, paid with Form 1040-ES. Dates and penalties are in the quarterly estimated taxes guide.

The S corporation question

An S corporation pays its shareholder-employee reasonable compensation for their work before it makes other distributions. Those wages carry employment taxes the way any employee’s do, and the IRS can reclassify distributions as wages when the pay is too low. Whether the election changes your total depends on your numbers, so run it with a CPA. The entity side of the question is in LLC vs S corp.

Do this

1. Confirm whether you’re self-employed for this purpose. Read the IRS self-employment tax page. If your entity is anything other than a sole proprietorship, a partnership or a disregarded single-member LLC, check with a CPA.
2. Keep your net profit figures current. The tax runs on net earnings, so track income and business expenses through the year.
3. Pay through estimated payments. Follow the IRS estimated taxes page and the quarterly estimated taxes guide.
4. File Schedule SE (Form 1040) with your Form 1040. The IRS Schedule SE page has the form. The return’s due date is in Small Business Taxes.