How Self-Employment Tax Works in 2026
See how the 15.3% self-employment tax is figured on net earnings, with a worked 2026 example and the deduction for half of it.
By Farrow (pseudonym; identity and professional credentials are not disclosed) · November 5, 2026. This guide is educational information, not tax advice.
When you work for an employer, half of your Social Security and Medicare tax comes out of your pay and the employer pays the other half. When you work for yourself, you pay both halves. That combined bill is called self-employment tax, and it is separate from federal income tax.
The rate and what it covers
The self-employment tax rate is 15.3%. It is made up of 12.4% for Social Security and 2.9% for Medicare. The Social Security part applies only up to the annual wage base, which is $184,500 for 2026. The Medicare part applies to all net earnings. A separate 0.9% Additional Medicare Tax can apply to earnings above $200,000 for a single filer.
It is figured on 92.35% of your profit
Self-employment tax is not applied to your full net profit. You first multiply net earnings from self-employment by 92.35%, which approximates the employer-equivalent portion that an employee would never be taxed on. Generally you owe the tax when your net earnings from self-employment are $400 or more.
A worked example
Suppose your net profit is $80,000 for the year. Multiply by 92.35% to get $73,880. Social Security is $73,880 × 12.4% = $9,161.12. Medicare is $73,880 × 2.9% = $2,142.52. The self-employment tax is $11,303.64, which is about 14.1% of the original $80,000.
You can deduct half of it
Half of your self-employment tax is deductible when you figure adjusted gross income. In the example, that is $11,303.64 ÷ 2 = $5,651.82. This deduction lowers your income tax. It does not lower the self-employment tax itself. Income tax is figured on the reduced amount, so the two taxes do not simply add up to a flat percentage of profit.
Plan for quarterly payments
No employer withholds tax from self-employed income, so many people make estimated tax payments during the year. Setting aside a share of every payment you receive makes the April bill less of a surprise. The right share depends on your income, filing status and deductions.
Try your own numbers with our self-employment tax calculator, then compare with the federal income tax calculator. Results are estimates, not tax advice.