Self-Employment Tax Calculator

After business expenses

Detailed Breakdown

Understanding Self-Employment Tax

Self-employment tax is the Social Security and Medicare tax paid by individuals who work for themselves. When you work as an employee, your employer pays half of the FICA taxes (7.65%) and you pay the other half. When you are self-employed, you pay both halves, for a total rate of 15.3%.

Self-Employment Tax Rate Breakdown

  • Social Security: 12.4% on net earnings up to $176,100 (2025/2026)
  • Medicare: 2.9% on all net earnings (no cap)
  • Additional Medicare: 0.9% on earnings over $200,000 (single) / $250,000 (married)
  • Total: 15.3% (or 16.2% above the additional Medicare threshold)

How Self-Employment Tax Is Calculated

  1. Start with net self-employment income (gross income minus business expenses)
  2. Multiply by 92.35% (this adjustment approximates the employer-equivalent deduction)
  3. Apply 12.4% Social Security tax on the result, up to $176,100
  4. Apply 2.9% Medicare tax on the full result (no cap)
  5. Add 0.9% additional Medicare if earnings exceed $200,000 (single)
  6. Deduct half of SE tax from gross income when calculating federal income tax
  7. Apply QBI deduction (up to 20% of qualified business income) if eligible

The QBI Deduction (Section 199A)

The Qualified Business Income deduction allows self-employed individuals to deduct up to 20% of their qualified business income from federal taxable income. This effectively reduces the federal income tax rate on self-employment income.

  • Available to sole proprietors, partnerships, S corps, and some trusts
  • The deduction is taken on the personal tax return (not the business return)
  • Phases out for specified service trades or businesses (SSTBs) like law, medicine, accounting, consulting above $191,950 (single) / $383,900 (married)
  • Does NOT reduce self-employment tax, only federal income tax

Estimated Tax Payments

Self-employed individuals must make quarterly estimated tax payments if they expect to owe $1,000 or more in federal tax. The due dates are:

  • Q1: April 15
  • Q2: June 15
  • Q3: September 15
  • Q4: January 15 (of the following year)

Most states that impose income tax also require quarterly estimated payments from self-employed individuals. Failure to make estimated payments may result in penalties and interest.

State Income Tax for Self-Employed

Self-employment income is subject to state income tax in the same way as W-2 wages. If you live in one of the seven no-income-tax states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming), you avoid state income tax entirely on your self-employment earnings. This can result in significant savings for high-earning freelancers and contractors.

For example, a self-employed consultant earning $150,000 in California would pay approximately $9,500 in state income tax. The same consultant in Texas or Florida would pay $0 in state income tax, saving nearly $10,000 per year.

Reducing Self-Employment Tax

While you cannot avoid self-employment tax on net earnings, there are legitimate strategies to reduce your overall tax burden:

  • Maximize business deductions — Home office, vehicle, equipment, software, professional development
  • S Corporation election — By electing S Corp status, you can split income between salary (subject to SE tax) and distributions (not subject to SE tax). Must pay a reasonable salary.
  • Retirement contributions — SEP IRA (up to 25% of net SE earnings, max $69,000), Solo 401(k) (up to $23,000 employee + 25% employer)
  • Health insurance deduction — Self-employed individuals can deduct 100% of health insurance premiums
  • Live in a no-income-tax state — Eliminates state income tax on SE earnings entirely

Frequently Asked Questions

15.3% (12.4% Social Security on earnings up to $176,100 + 2.9% Medicare on all earnings). An additional 0.9% Medicare surtax applies above $200,000 (single).

Multiply net SE income by 92.35%, then apply 15.3% SE tax. You can deduct half the SE tax from gross income for income tax purposes. The QBI deduction may further reduce your income tax.

Yes, in the 43 states with income tax. The 7 no-income-tax states (AK, FL, NV, SD, TX, WA, WY) do not tax self-employment income.

The QBI deduction lets you deduct up to 20% of qualified business income from federal taxable income. It reduces income tax but not SE tax. Phases out for specified service businesses above $191,950 (single).