What is the self-employment tax rate?

The self-employment tax rate is 15.3% — 12.4% for Social Security plus 2.9% for Medicare. The Social Security portion applies only up to an annual wage base ($184,500 in 2026); the Medicare portion has no cap. The tax is applied to 92.35% of your net self-employment earnings.

Do I have to pay self-employment tax?

Generally yes, if your net earnings from self-employment are $400 or more for the year. It applies whether the work is full-time, part-time, or a side hustle, and it's separate from and in addition to income tax.

Is self-employment tax deductible?

You can deduct half of your self-employment tax as an adjustment to income, which lowers your income tax (it does not reduce the self-employment tax itself). This mirrors the employer-side payroll tax that a business would normally deduct.

Does self-employment tax fund Social Security and Medicare?

Yes. Self-employment tax is how self-employed people pay into Social Security and Medicare, the same programs that payroll taxes fund for employees. Paying it is what builds your Social Security earnings record.

Self-employment tax explained: the 15.3% and how it works

Q: Why is self-employment tax 15.3% when employees pay 7.65%?

Employees pay 7.65% toward Social Security and Medicare and their employer pays a matching 7.65%. When you're self-employed you are both the worker and the employer, so you pay both halves — 15.3% in total. To offset this, you can deduct half of the self-employment tax when figuring your income tax.

The first time a freelancer files taxes, one line tends to cause a double-take: a 15.3% self-employment tax, charged on top of income tax. It isn't a penalty and it isn't optional — it's how you pay into Social Security and Medicare. Here's exactly how it's figured, and the deduction that softens the blow.

Last reviewed: June 2026 · Figures shown for the 2026 tax year

The quick answer

Self-employment (SE) tax is 15.3%, made of two parts:

12.4% for Social Security, charged only up to an annual wage base ($184,500 in 2026). Earnings above that aren't subject to the Social Security portion.
2.9% for Medicare, with no upper limit — and an extra 0.9% on earnings above $200,000 (single) or $250,000 (married filing jointly).

One key detail keeps it from being quite as bad as it sounds: the 15.3% is applied to 92.35% of your net self-employment earnings, not the whole amount.

Why it's 15.3% (and employees "only" pay 7.65%)

Social Security and Medicare are funded by a 15.3% payroll tax on wages — but for employees it's split. You pay 7.65% out of your paycheck and your employer quietly pays the matching 7.65%. You never see their half, so it feels like 7.65% is the whole tax.

When you're self-employed, you are both the worker and the employer, so you pay both halves yourself. That's the entire reason the number doubles to 15.3%. It's not that freelancers are taxed more harshly — it's that the employer's hidden contribution is now yours to cover. (This is also why a 1099 rate has to beat a salary by a meaningful margin before you come out even.)

How it's actually calculated

The math runs in four steps:

Start with net profit — your business income after deductible expenses (from Schedule C).
Multiply by 92.35%. This adjustment exists because employees don't pay payroll tax on the employer's share; it puts you on similar footing.
Apply 15.3% (12.4% only up to the Social Security wage base, plus 2.9% with no cap) to that figure. The result is your self-employment tax.
Deduct half. You subtract 50% of the SE tax as an adjustment to income when figuring income tax.

Example: $60,000 net profit

$60,000 × 92.35% = $55,410 of taxable SE earnings. × 15.3% = ≈ $8,478 self-employment tax. Half of that — about $4,239 — is deductible against your income tax.

What the deductible half actually does

Deducting half your SE tax doesn't reduce the SE tax itself — you still send the full amount to the IRS. Instead, it lowers the income on which your income tax is calculated. It's the self-employed version of a business getting to deduct the payroll taxes it pays. Helpful, but it's important to know it cuts income tax, not the 15.3%.

Two more things worth knowing:

SE tax is separate from income tax. You owe both, stacked together — which is why a freelancer's total tax bite is higher than a salaried worker's on the same number, before deductions.
Most deductions don't reduce it. Business expenses lower your net profit (and therefore SE tax), but the QBI deduction and adjustments like health insurance and retirement contributions only reduce income tax. See the deduction checklist for which is which.

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Frequently asked questions

What is the self-employment tax rate?: 15.3% — 12.4% Social Security (up to a $184,500 wage base in 2026) plus 2.9% Medicare (no cap), applied to 92.35% of your net self-employment earnings.
Why is it 15.3% when employees pay 7.65%?: Employees split the 15.3% with their employer. Self-employed people are both, so they pay both halves — offset partly by deducting half of the SE tax.
Do I have to pay it?: Generally yes, if your net self-employment earnings are $400 or more for the year — full-time, part-time, or side hustle, and on top of income tax.
Is self-employment tax deductible?: You can deduct half of it as an adjustment to income, which lowers income tax (not the SE tax itself).
Does it fund Social Security and Medicare?: Yes — it's how the self-employed pay into both programs and build a Social Security earnings record.