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

Self-employment tax is a mix of Social Security and Medicare taxes. Use our calculator to estimate what you owe.

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Tina Orem is an editor at NerdWallet. Prior to becoming an editor, she covered small business and taxes at NerdWallet. She has been a financial writer and editor for over 15 years, and she has a degree in finance, as well as a master's degree in journalism and a Master of Business Administration. Previously, she was a financial analyst and director of finance for several public and private companies. Tina's work has appeared in a variety of local and national media outlets.

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• Self-employment tax applies to self-employed people who earned more than $400 during the year.
• The self-employment tax rate — a combination of Social Security and Medicare taxes — is 15.3% for 2023 and 2024.
• You'll use Schedule C to calculate net earnings and Schedule SE to calculate how much tax you owe.
• You can deduct 50% of your self-employment tax on your income taxes.

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%. That rate is the sum of 12.4% for Social Security and 2.9% for Medicare. Self-employment tax 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 either of these things are true during the year:

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.

The tax rules apply no matter how old you are and even if you’re receiving Social Security or are on Medicare.

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The self-employment tax rate for 2024

The self-employment tax rate is 15.3% of net earnings in 2024. That rate is the sum 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.

For the 2024 tax year, the first $168,600 of earnings is subject to the Social Security portion (up from $160,200 in 2023).

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.

Self-employment tax calculator

Fill in the fields below to estimate your potential self-employment tax for the 2024 tax year.

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 usually are your gross income from self-employment minus your business expenses.

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 2024, only the first $168,600 of earnings is subject to the Social Security portion of self-employment tax (up from $160,200 in 2023).

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.

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How to pay self-employment tax

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 2023 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 .

» MORE: Compare online loan options for funding and eventually growing your small business.

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Tina Orem is an editor at NerdWallet. Before becoming an editor, she was NerdWallet's authority on taxes and small business. Her work has appeared in a variety of local and national outlets. See full bio.

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