What is self-employment tax?
When you work for yourself there’s no employer to split payroll taxes with, so you pay both halves: 12.4% Social Security and 2.9% Medicare = 15.3%. It’s charged on 92.35% of your net earnings and is separate from federal income tax.
The deductible half
You can deduct half of your SE tax when figuring your income tax — it lowers your taxable income (not the SE tax itself). That’s why the calculator shows the deductible portion separately.
The Social Security cap
The 12.4% Social Security portion only applies up to the annual wage base ($176,100 for 2025). The 2.9% Medicare portion has no cap, and an extra 0.9% applies to high earners over $200,000.
Frequently asked questions
Is this the same as income tax?
No. SE tax is Social Security and Medicare only. You’ll also owe federal (and possibly state) income tax on the same income, calculated separately.
Why 92.35%?
You only pay SE tax on 92.35% of net earnings — this adjusts for the employer-equivalent portion that an employee wouldn’t be taxed on.
Do I pay this quarterly?
Usually yes — the self-employed make estimated quarterly payments to the IRS to cover SE tax plus income tax.