Self-Employment Tax: What It Is, How to Calculate It

You may need to pay self-employment tax if you’re a freelancer, an independent contractor or a small-business owner. Here’s what self-employment tax is, how it works and how you can save.

What is self-employment tax?

The self-employment tax rate is 15.3%. It applies to net earnings — what many call profit. You may need to pay self-employment taxes throughout the year.

There's one big difference between self-employment tax and the payroll taxes people with employers pay: Typically, employees and their employers split the bill on Social Security tax and Medicare tax (i.e., you pay 7.65% and your employer pays 7.65%), whereas self-employed people pay both halves.

Who has to pay self-employment tax?

In general, you have to pay self-employment tax if you had $400 or more in net earnings from self-employment (excluding anything you made as a church employee). You may be self-employed in the eyes of the IRS if you received a 1099 form from an entity you did work for.

You may also have to pay self-employment tax if you made $108.28 or more in income from church employment. The tax rules apply no matter how old you are and even if you’re receiving Social Security or are on Medicare.

Self-employment tax rate

The self-employment tax rate is 15.3%, which is a combination of a 12.4% Social Security tax (also known as OASDI tax) and a 2.9% Medicare tax on net earnings. Self-employment tax is not the same as income tax.

In 2025, only the first $176,100 of earnings is subject to the Social Security portion. In 2024, that threshold was $168,600. A 0.9% additional Medicare tax may also apply if your net earnings from self-employment exceed $200,000 if you’re a single filer or $250,000 if you’re filing jointly.

How to calculate self-employment tax

Calculating your tax starts by calculating your net earnings from self-employment for the year.

• For tax purposes, net earnings are usually your gross income from self-employment minus your business expenses.

• Generally, 92.35% of your net earnings from self-employment is subject to self-employment tax.

• Once you’ve determined how much of your net earnings from self-employment are subject to tax, apply the 15.3% tax rate.

• Remember, though — for 2025, only the first $176,100 of earnings is subject to the Social Security portion of self-employment tax.

If you had a loss or just a little bit of income from self-employment, be sure to check out the two optional methods in IRS Schedule SE to calculate your net earnings.

Self-employment tax calculator

Fill in the fields below to estimate your potential self-employment tax for the 2025 calendar year.

How to pay self-employment tax

• Generally, you use IRS Schedule C to calculate your net earnings from self-employment, and you use IRS Schedule SE to calculate how much self-employment tax you owe.

• You’ll need to provide your Social Security number or individual taxpayer identification number (ITIN) when you pay the tax.

• Taxes are a pay-as-you-go deal in the United States, so waiting until the annual tax filing deadline to pay your self-employment tax may mean incurring late-payment penalties. Instead, you may need to make quarterly estimated tax payments throughout the year if you expect:

• You’ll owe at least $1,000 in federal income taxes this year, even after accounting for your withholding and refundable credits (such as the earned income tax credit), and

• Your withholding and refundable credits will cover less than 90% of your tax liability for this year or 100% of your liability last year, whichever is smaller. (The threshold is 110% of tax owed last year if your adjusted gross income for 2024 was more than $150,000 for married couples filing jointly or $75,000 for singles.)

Tax deductions for self-employment

You can deduct half of your self-employment tax on your income taxes. So, for example, if your Schedule SE says you owe $2,000 in self-employment tax for the year, you'll need to pay that money when it's due during the year, but at tax time $1,000 would be deductible on your 1040.

Self-employment can score you a bunch of sweet tax deductions, too. One is the qualified business income deduction, which lets you take an income tax deduction for as much as 20% of your self-employment net income. Plus, there are other deductions available for your home office, health insurance and more. Here’s a primer on self-employment deductions.

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