Updated November 1, 2026 for the 2026 tax year
What is self-employment tax?
Self-employment tax is Social Security and Medicare for people who work for themselves. An employee pays 7.65% and the employer pays another 7.65%. When you're self-employed you're both, so the total rate is 15.3%. It's reported on Schedule SE and due once your net profit reaches $400.
2026 self-employment tax rates
| Part | Rate | Applies to |
|---|---|---|
| Social Security | 12.4% | Net earnings up to $184,500 (minus W-2 wages) |
| Medicare | 2.9% | All net earnings |
| Additional Medicare | 0.9% | Earnings over $200,000 single / $250,000 joint |
How the calculation works
Your net earnings from self-employment are 92.35% of your profit. That trims off the share an employer would normally pay, so you aren't taxed on it. Multiply that figure by 15.3% (Social Security stops at the wage base) and you have your SE tax.
Example: $65,000 of profit × 92.35% = $60,027.50. Times 15.3% = $9,184.21 of SE tax. Half of that, $4,592.10, comes off your income before income tax is figured.
Ways people lower it
Every legitimate business expense lowers profit, which lowers SE tax. Some owners with higher, steady profits elect S-corporation status and pay themselves a reasonable salary, which can reduce SE tax on the rest. That move has its own costs and rules, so run it past a tax professional first.
Common questions
Is self-employment tax the same as income tax?
No. SE tax is Social Security and Medicare. You owe it on top of regular income tax, though half of it is deductible when figuring income tax.
Do I pay self-employment tax if I also have a W-2 job?
Yes, on your business profit. Your W-2 wages count toward the $184,500 Social Security cap first, so if your wages are high, less of your business income gets the 12.4% part.
What is the maximum self-employment tax for 2026?
The Social Security portion tops out at $22,878 (12.4% of $184,500). Medicare has no cap.
Sources: IRS Rev. Proc. 2025-32 (2026 inflation adjustments), Social Security Administration 2026 wage base, IRS Publication 505 and Form 1040-ES.