Definition
Social Security and Medicare tax paid by people who work for themselves, at 15.3% on most net earnings.
What it means
Self-employment tax is how freelancers, gig workers and sole proprietors pay into Social Security and Medicare. The rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare, applied to 92.35% of net earnings from self-employment. For 2026, the Social Security part applies only up to the $184,500 wage base, counting any W-2 wages, while the Medicare part has no limit, and an additional 0.9% Medicare tax applies above $200,000 for single filers. You owe it if net self-employment earnings are $400 or more, and you figure it on Schedule SE. You can deduct half of the tax as an adjustment to income. It is separate from income tax, so someone with little income tax can still owe self-employment tax.
Example
A designer with $40,000 of net profit has $36,940 of net earnings (92.35%), and self-employment tax of about $5,652, half of which (about $2,826) is deductible.
Illustrative numbers only. Your situation will differ.