Self-employment tax is how freelancers pay Social Security and Medicare. The rate is 15.3%: 12.4% for Social Security plus 2.9% for Medicare, per the IRS. It isn’t charged on your full profit, though. It’s charged on 92.35% of it, the Social Security part stops at a yearly cap, and you deduct half of it on your income tax return. Put together, most freelancers pay an effective rate of about 14.13% of net profit.
Who pays it
You owe self-employment tax if your net earnings from self-employment are $400 or more, according to the IRS. Church employee income has its own, lower threshold. Sole proprietors, independent contractors and single-member LLC owners taxed as sole proprietors all fall under it. It’s reported on Schedule SE and added to your income tax on Form 1040.
It’s separate from income tax, so deductions like the standard deduction don’t reduce it. A freelancer can owe zero income tax and still owe self-employment tax.
The 2026 numbers at a glance
| Amount | Where it comes from | |
|---|---|---|
| Minimum to owe it | $400 of net earnings (about $433 of profit) | Publication 505 (2026), Worksheet 2-3, line 3; Schedule SE, line 4c |
| Combined rate | 15.3% | IRS: Self-employment tax page |
| Social Security part | 12.4%, up to $184,500 | Form 1040-ES worksheet, lines 5 to 9 |
| Medicare part | 2.9%, no cap | Form 1040-ES worksheet, line 4 |
| Typical effective rate below the cap | 14.13% of net profit | 15.3% × 92.35% |
| Most the Social Security part can reach | $22,878 | $184,500 × 12.4% |
| Additional Medicare Tax starts at | $200,000 single, $250,000 joint, $125,000 separate | Publication 505 (2026) |
Minimum to owe it
- Amount
- $400 of net earnings (about $433 of profit)
- Where it comes from
- Publication 505 (2026), Worksheet 2-3, line 3; Schedule SE, line 4c
Combined rate
- Amount
- 15.3%
- Where it comes from
- IRS: Self-employment tax page
Social Security part
- Amount
- 12.4%, up to $184,500
- Where it comes from
- Form 1040-ES worksheet, lines 5 to 9
Medicare part
- Amount
- 2.9%, no cap
- Where it comes from
- Form 1040-ES worksheet, line 4
Typical effective rate below the cap
- Amount
- 14.13% of net profit
- Where it comes from
- 15.3% × 92.35%
Most the Social Security part can reach
- Amount
- $22,878
- Where it comes from
- $184,500 × 12.4%
Additional Medicare Tax starts at
- Amount
- $200,000 single, $250,000 joint, $125,000 separate
- Where it comes from
- Publication 505 (2026)
Figures checked against the IRS sources listed below on October 6, 2026. The $433 is $400 ÷ 92.35%, our arithmetic.
How it’s calculated, in four steps
The 2026 version of the calculation is the Self-Employment Tax and Deduction Worksheet in the 2026 Form 1040-ES. The same worksheet appears as Worksheet 2-3 in Publication 505 (2026).
1. Start from 92.35% of your net profit
Take your net profit (Schedule C, line 31, for a sole proprietor) and multiply it by 92.35%. The result is your net earnings from self-employment, the base the tax is charged on. If it’s under $400, Publication 505 says you won’t owe self-employment tax.
Why 92.35%? It’s 100% minus 7.65%, and 7.65% is half of 15.3%. In effect, you’re not taxed on the slice of profit that corresponds to the “employer half” of the tax, just as an employee’s FICA isn’t charged on what their employer pays.
2. Apply 12.4% for Social Security, up to the wage base
Multiply your net earnings by 12.4%, but only up to the Social Security maximum. For 2026 that’s $184,500, per Form 1040-ES. The cap covers wages and self-employment earnings combined. If you also had W-2 wages subject to Social Security tax, the worksheet subtracts them from $184,500 first, and only the remaining room is available for your self-employment earnings.
3. Apply 2.9% for Medicare, with no cap
Multiply all of your net earnings by 2.9%. Unlike Social Security, there’s no upper limit.
4. Deduct half on your income tax return
Add steps 2 and 3 to get your self-employment tax. Then take 50% of it as a deduction on Schedule 1 (Form 1040), line 15, per the Form 1040-ES worksheet. This lowers your adjusted gross income and so your income tax. It doesn’t lower the self-employment tax itself. In the IRS’s words, this deduction “only affects your income tax.”
Example: $60,000 of net profit
- 1$60,000
Net profit (Schedule C)
- 2$55,410
Net earnings from self-employment
$60,000 × 92.35%
- 3$6,871
Social Security portion
$55,410 × 12.4% (under the $184,500 cap)
- 4$1,607
Medicare portion
$55,410 × 2.9%
- 5$8,478
Self-employment tax
$6,871 + $1,607
- 614.13%
Effective rate on net profit
$8,478 ÷ $60,000
- 7$4,239
Deduction on Schedule 1, line 15
$8,478 × 50%
Assumes no W-2 wages. Rounded to the dollar, as on the IRS worksheet.
The 14.13% is 15.3% × 92.35%, and it holds at any profit level below the Social Security cap. The $4,239 deduction then reduces your AGI. How much income tax that saves depends on your bracket.
Example: a high earner past the Social Security cap
Now take $220,000 of net profit. Net earnings are $220,000 × 92.35% = $203,170, which is above the $184,500 cap:
- Social Security: $184,500 × 12.4% = $22,878 (the maximum for 2026)
- Medicare: $203,170 × 2.9% = $5,892
- Self-employment tax: $28,770, or about 13.1% of net profit
- Deductible half: $14,385
A single filer at this level also crosses the threshold for the separate 0.9% Additional Medicare Tax. The threshold is $200,000 for single filers, $250,000 married filing jointly and $125,000 married filing separately, per Publication 505 (2026). Here that’s ($203,170 − $200,000) × 0.9% ≈ $29, figured on Form 8959 and not part of the self-employment tax.
The chart shows the pattern. Self-employment tax grows in a straight line until net earnings reach the $184,500 wage base, at roughly $199,784 of net profit. After that, only the 2.9% Medicare part keeps growing, so the effective rate falls.
- $25,000 profit$3,533(14.13%)
- $50,000 profit$7,065(14.13%)
- $100,000 profit$14,129(14.13%)
- $150,000 profit$21,194(14.13%)
- $200,000 profit$28,234(14.12%)
- $250,000 profit$29,573(11.83%)
- $300,000 profit$30,912(10.30%)
Assumes no W-2 wages and a single filer. Social Security (12.4%) stops at $184,500 of net earnings (about $199,783 of net profit), while Medicare (2.9%) has no cap. Excludes the separate 0.9% Additional Medicare Tax. Figures rounded to the dollar.
Example: the same $60,000 with a W-2 job
The wage base is shared between your paycheck and your business, so a W-2 job changes the result. Say you also earned $150,000 in W-2 wages that were subject to Social Security tax, and you have $60,000 of net profit from freelancing.
- Net earnings from self-employment: $60,000 × 92.35% = $55,410
- Room left under the cap: $184,500 − $150,000 = $34,500, which is less than $55,410
- Social Security: $34,500 × 12.4% = $4,278
- Medicare: $55,410 × 2.9% = $1,607
- Self-employment tax: $5,885, or about 9.81% of net profit
Without the W-2 job, the same profit costs $8,478 (see the first example). Only the Social Security part changes; Medicare is charged on all $55,410 either way. This follows lines 5 to 9 of the 1040-ES worksheet, where expected wages are subtracted from $184,500.
The 0.9% Additional Medicare Tax is a separate tax, reported on Form 8959, and it isn’t part of the $5,885. The IRS combines your Medicare wages and your net earnings from self-employment to see whether you’re over the threshold (Form 8959 instructions). Assuming your Medicare wages match the $150,000, plus $55,410 of net earnings, you’re $5,410 over the $200,000 single-filer threshold, so the tax is $5,410 × 0.9% ≈ $49. Our self-employment tax calculator shows the same $49 for these inputs.
What it costs at different profit levels
| Net profit | Social Security | Medicare | Total | % of profit |
|---|---|---|---|---|
| $10,000 | $1,145 | $268 | $1,413 | 14.13% |
| $30,000 | $3,435 | $803 | $4,238 | 14.13% |
| $60,000 | $6,871 | $1,607 | $8,478 | 14.13% |
| $100,000 | $11,451 | $2,678 | $14,129 | 14.13% |
| $150,000 | $17,177 | $4,017 | $21,194 | 14.13% |
| $220,000 | $22,878 | $5,892 | $28,770 | 13.08% |
$10,000
- Social Security
- $1,145
- Medicare
- $268
- Total
- $1,413
- % of profit
- 14.13%
$30,000
- Social Security
- $3,435
- Medicare
- $803
- Total
- $4,238
- % of profit
- 14.13%
$60,000
- Social Security
- $6,871
- Medicare
- $1,607
- Total
- $8,478
- % of profit
- 14.13%
$100,000
- Social Security
- $11,451
- Medicare
- $2,678
- Total
- $14,129
- % of profit
- 14.13%
$150,000
- Social Security
- $17,177
- Medicare
- $4,017
- Total
- $21,194
- % of profit
- 14.13%
$220,000
- Social Security
- $22,878
- Medicare
- $5,892
- Total
- $28,770
- % of profit
- 13.08%
Each row follows the 2026 Form 1040-ES worksheet, rounded to the dollar. Single filer, no W-2 wages. The $220,000 row is past the Social Security cap and excludes the Additional Medicare Tax.
The rate is flat at 14.13% until profit reaches about $199,784. Past that point the Social Security part is capped at $22,878 and only the Medicare part grows.
What the tax covers, and what it doesn’t
The figures above include the Social Security and Medicare parts of self-employment tax, and nothing else. They leave out:
- Federal income tax, which is figured separately on your income after deductions.
- The 0.9% Additional Medicare Tax, which is reported on Form 8959 (it applies above the thresholds in the first table).
- State and local income taxes, and any state-level payroll or self-employment charges.
- Penalties or interest if you underpay during the year.
- Anything the half-of-SE-tax deduction saves you, since that depends on your income tax bracket.
Where this fits in your overall tax bill
Income tax comes on top of self-employment tax, and the two together are why freelancers make quarterly estimated payments. See Quarterly Estimated Taxes for the Self-Employed for how they combine into your quarterly payment, and How Much Should I Set Aside for Taxes as a Freelancer? for the total at different income levels. To run your own profit through these steps, use the self-employment tax calculator, which also shows how a W-2 job changes the result. If you’re weighing a salary offer against contract work, the 1099 vs. W-2 calculator shows how much more you would need to bill to keep the same pay.
The same numbers matter for retirement savings. Solo 401(k) and SEP IRA contribution limits for the self-employed are based on net profit minus the deductible half of self-employment tax. The Self-Employed Retirement Contribution Calculator runs that calculation for you. The contribution lowers your income tax but not this tax, which is explained in Does a Solo 401(k) Reduce Self-Employment Tax?
Does forming an LLC or S corp change it?
An LLC alone doesn’t: a single-member LLC is taxed like a sole proprietorship by default, so the same self-employment tax applies. See LLC vs. Sole Proprietorship. An S corporation election does change it. You pay payroll taxes on a reasonable salary instead of self-employment tax on all profit. Whether that saves money is worked through in S Corp Election for Freelancers.
How we got these figures
Every rate, threshold and cap in this article comes from the IRS documents listed under Sources: the 2026 Form 1040-ES, Publication 505 (2026) and the IRS self-employment tax page. We opened them on October 6, 2026. The worked examples and the profit-level table are our own arithmetic, applying the Form 1040-ES worksheet step by step with the rounding noted under each one. The IRS self-employment tax page still showed the 2024 Social Security wage base when we checked, so the $184,500 figure for 2026 relies on Form 1040-ES and Publication 505, which both state it. We update this page when the IRS publishes new limits. For how we choose and check sources in general, see How We Research.
