What is the self-employment tax rate?

The self-employment (SE) tax rate is 15.3% on net self-employment earnings — 12.4% for Social Security and 2.9% for Medicare. This is double the 7.65% FICA rate paid by W-2 employees, because self-employed individuals pay both the employee and employer shares. On $60,000 of net SE income in 2026, the SE tax is roughly $8,478 (15.3% × $60,000 × 0.9235, applying the 92.35% adjustment for the deductible half).

How do I enter self-employment income in this calculator?

Enter your net self-employment income — revenue minus allowable business expenses — in the Self-Employment Income field below your W-2 wages. The calculator computes the full 15.3% SE tax, deducts the employer-equivalent half from your AGI, and folds SE income into your federal and state income tax brackets alongside any W-2 income.

Can I deduct half of self-employment tax?

Yes. The IRS allows you to deduct 50% of your SE tax from gross income when calculating your adjusted gross income (AGI). This deduction mirrors the tax treatment of W-2 employees, whose employer pays half of FICA on their behalf. On $60,000 net SE income in 2026, the SE tax is roughly $8,478 — you can deduct about $4,239, reducing your federal taxable income by that amount.

Do self-employed people pay state income tax?

Yes. Net self-employment income is subject to state income tax in the same way as W-2 wages in most states. Nine states have no individual income tax (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire on wages). In high-tax states like California or New York, state income tax on SE income can add 5–13% on top of federal liability.

Do self-employed workers have to pay quarterly estimated taxes?

Yes, if you expect to owe $1,000 or more in federal tax for the year, the IRS requires quarterly estimated payments (due April 15, June 15, September 15, and January 15). Failing to pay enough throughout the year results in an underpayment penalty. Self-employed individuals should set aside roughly 25–30% of net income for taxes — more in high-tax states — and pay quarterly to avoid a large balance at filing.

Is self-employment tax the same as income tax?

No — SE tax and income tax are separate. SE tax (15.3%) covers Social Security and Medicare and is calculated on Schedule SE. Income tax is calculated separately using your AGI, deductions, and the progressive federal bracket system. You owe both. A self-employed individual with $70,000 net income might owe roughly $9,400 in SE tax plus another $7,000–$9,000 in federal income tax — totaling $16,000–$18,000 in combined federal taxes before any deductions or credits.

Does SE tax apply to S-corp owner-employees?

Not directly. S-corp shareholders who also work in the business must pay themselves a "reasonable salary" as a W-2 employee, on which normal FICA (7.65% employee + 7.65% employer) applies. Distributions above the salary are not subject to SE tax or FICA. Many self-employed people elect S-corp status once net income consistently exceeds $40,000–$60,000 to reduce FICA exposure, though the strategy involves additional administrative costs.

Self-Employment Tax Calculator — SE Tax & Net Income

Estimates SE tax (15.3%), deductible half, federal income tax, state tax, and total annual liability for freelancers and self-employed workers.

How to Use This Self-Employment Tax Calculator

This self employment tax calculator estimates your total annual tax burden as a freelancer, independent contractor, or sole proprietor. Enter your net self-employment income in the Self-Employment Income field — this is your revenue minus allowable business expenses. Add any W-2 wages if you also have an employer job, then select your state and filing status. The calculator shows:

Self-employment tax (15.3%) broken into Social Security and Medicare components
The deductible half of SE tax that reduces your AGI
Federal income tax after applying the SE deduction and standard deduction
State income tax for your selected state
Total annual tax liability and effective rate

For an annual income tax comparison across states, use the income tax calculator.

What Is Self-Employment Tax?

Self-employment tax (SE tax) is the Social Security and Medicare tax owed by people who work for themselves. W-2 employees split FICA 50/50 with their employer — each pays 7.65%. When you are self-employed, you pay both halves, bringing the combined rate to 15.3% on net self-employment earnings.

SE Tax Rate Breakdown (2026)

Social Security: 12.4% on net SE income up to the 2026 wage base of $184,500. Once your net self-employment earnings exceed this threshold, no further Social Security SE tax applies.
Medicare: 2.9% on all net SE income with no cap. Net SE income above $200,000 (single) or $250,000 (married jointly) also triggers an additional 0.9% Medicare surtax.

SE tax applies to 92.35% of net earnings (100% minus the employer-equivalent half of FICA at 7.65%), which effectively gives you a small reduction before applying the 15.3% rate.

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The Self-Employment Tax Deduction

The IRS allows self-employed individuals to deduct 50% of their SE taxfrom gross income as an above-the-line deduction when calculating AGI. This mirrors the tax treatment of W-2 employees, who never see the employer's share of FICA because it comes out of the employer's own payroll budget.

Example — $80,000 Net SE Income

Net SE earnings × 92.35% = $73,880 subject to SE tax
SE tax (15.3%) = $11,304
Deductible half = $5,652 — this reduces your AGI
Federal taxable income = $80,000 − $5,652 − $16,100 (std ded.) = $58,248
Federal income tax ≈ $7,729 (single filer, 2026 brackets)
Total federal obligation ≈ $19,033 — about 24% of gross SE income

Quarterly Estimated Tax Payments

Unlike W-2 employees whose employer withholds tax each paycheck, self-employed individuals must pay taxes themselves on a quarterly schedule. If you expect to owe $1,000 or more for the year, the IRS requires estimated payments:

Q1: April 15 (for income earned January–March)
Q2: June 15 (for income earned April–May)
Q3: September 15 (for income earned June–August)
Q4: January 15 of the following year (for income earned September–December)

Underpaying estimated taxes results in an IRS underpayment penalty. The safe harbor rule lets you avoid penalties by paying at least 100% of last year's tax liability (110% if your prior-year AGI exceeded $150,000), divided across four quarterly payments.

Business Expense Deductions That Reduce SE Tax

SE tax is calculated on net self-employment income — revenue minus allowable business expenses. Legitimate business deductions that reduce your net income directly reduce your SE tax burden:

Home office deduction — if you use a dedicated space exclusively for business, you can deduct a portion of rent/mortgage interest, utilities, and insurance based on the percentage of your home used for work.
Health insurance premiums — self-employed individuals can deduct 100% of health, dental, and vision insurance premiums paid for themselves and family members (as long as you were not eligible for an employer-sponsored plan).
Retirement plan contributions — SEP-IRA contributions (up to 25% of net SE income, capped at $69,000 in 2026) and Solo 401(k) contributions reduce AGI dollar-for-dollar.
Business mileage — the 2026 IRS standard mileage rate of 70 cents per mile driven for business purposes.
Software, equipment, and professional services — ordinary and necessary business costs are fully deductible against SE income.

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State Income Tax for Self-Employed Workers

Net self-employment income is subject to state income tax in most states. The SE tax itself (the FICA component) is a federal tax only — no state levies a separate Social Security or Medicare tax. However, state income tax brackets and deductions apply to your adjusted gross income, which includes net SE income. Use the state selector in the calculator above to model your state-level liability.

High-Tax States vs. No-Tax States

A self-employed individual earning $80,000 in California pays roughly $3,400–$5,000 in California state income tax on top of federal SE and income tax. The same person in Texas, Florida, or Nevada owes $0 in state income tax. Over a career, this difference compounds significantly — especially for higher earners. See the California income tax calculator or the Texas income tax calculator to compare.

Tax Disclaimer

This calculator provides estimates for informational purposes only. It is not tax or financial advice. SE tax rates, federal income tax brackets, state tax rules, deduction limits, and contribution limits can change annually. Quarterly estimated tax deadlines and safe harbor thresholds are subject to IRS guidance. Consult a qualified tax professional or CPA for guidance specific to your business structure and tax situation.

Sources & References

Schedule SE (Form 1040): Self-Employment Tax Instructions — Internal Revenue Service
IRS Publication 334: Tax Guide for Small Business — Internal Revenue Service
IRS Publication 505: Tax Withholding and Estimated Tax — Internal Revenue Service

Self-Employment Tax Calculator