What is self-employment tax?
Employees and employers split Social Security and Medicare taxes. When you work for yourself, as a freelancer, gig worker or business owner paid on Form 1099, you pay both halves as self-employment (SE) tax:
- 15.3% in total – 12.4% for Social Security and 2.9% for Medicare.
- On 92.35% of net profit – this adjustment matches the employer half of the tax that employees never see.
- Social Security limit – the 12.4% part applies only to the first $184,500 of combined wages and self-employment earnings in 2026.
- Extra 0.9% Medicare – on earnings above $200,000 ($250,000 for married couples filing jointly).
You can deduct half of your SE tax from your income, and many self-employed people can also deduct up to 20% of their qualified business income (QBI). The calculator includes both when estimating your federal income tax.
Paying quarterly estimated taxes
No one withholds tax from self-employment income, so the IRS expects quarterly estimated payments. For 2026 income, they are due April 15, June 15 and September 15, 2026, and January 15, 2027.
Frequently asked questions
Do I owe self-employment tax on a small side gig?
Yes, if your net self-employment earnings are $400 or more for the year. Report them on Schedule C and Schedule SE.
How do I avoid an underpayment penalty?
Pay at least 90% of this year's tax or 100% of last year's tax (110% if last year's AGI was over $150,000) through withholding and estimated payments.
What expenses can I deduct?
Ordinary and necessary business costs, such as supplies, software, a home office, business mileage and health insurance premiums for self-employed people, reduce your net profit and both taxes.