Self-Employment Tax Calculator

An employee and their employer each pay 7.65% in FICA. Working for yourself, you are both, so the combined rate is 15.3% — 12.4% Social Security plus 2.9% Medicare. It applies on top of income tax, and it starts at just $400 of net earnings, which is why a profitable side business can generate a tax bill even when income tax is zero.

First, only 92.35% of profit counts, which reflects the employer half you're allowed to exclude: $73,880. Social Security at 12.4% is $9,161 and Medicare at 2.9% is $2,143, for $11,304 total — about 14.1% of the original profit, not 15.3%. Half of that, $5,652, is deductible against your income tax, so the real cost is lower again.

The 92.35% multiplier and the deduction for half the tax both exist to put you roughly on par with an employee, and together they cut the effective rate meaningfully. The deduction for half is an adjustment to income — you take it whether or not you itemize, and it reduces income tax but never the self-employment tax itself. Neither is optional or obscure; both are on Schedule SE.

Social Security tax stops at the wage base — $176,100 in 2025 — while Medicare has no ceiling and gains an extra 0.9% above $200,000 single or $250,000 joint. If you also have a W-2 job, those wages fill the Social Security base first, so a high salary can leave your self-employment profit exempt from the 12.4% while still fully liable for Medicare. That interaction catches a lot of people with a job plus a side business.

Nobody withholds this for you, so the IRS expects quarterly estimated payments, generally due mid-April, mid-June, mid-September, and mid-January. Underpaying triggers interest-style penalties even if you settle in full at filing. The usual safe harbours are paying 90% of the current year's liability or 100% of last year's — 110% at higher incomes — and a common working rule is to set aside 25–30% of profit for SE tax and income tax combined.