What Is Self-Employment Tax? 2026 Rate and How It Works
Skip the mathSelf-employment tax calculator 2026Self-employment tax is the Social Security and Medicare tax you pay when you work for yourself. Employees split these taxes with their employer. When you are a freelancer, a 1099 contractor or a gig driver, you are both, so you pay both halves.
The short answer: for 2026 the rate is 15.3 % of 92.35 % of your net profit. That works out to about 14.1 % of your profit, before income tax.
Who pays self-employment tax
You pay it if your net earnings from self-employment are $400 or more in the year. That includes:
- Freelancers and independent contractors who get a 1099-NEC
- Gig workers on DoorDash, Uber, Lyft, Instacart and similar apps
- Sole proprietors and single-member LLC owners
- People with a side business next to a W-2 job
The 2026 rates
| Part | Rate | Applies to |
|---|---|---|
| Social Security | 12.4 % | Net earnings up to $184,500 |
| Medicare | 2.9 % | All net earnings |
| Additional Medicare | 0.9 % | Above $200,000 single, $250,000 married filing jointly |
The Social Security limit is the same one employees have. If you also have a W-2 job, your wages use up that limit first.
How to work it out, step by step
- Find your net profit. That is your business income minus business expenses, from Schedule C.
- Multiply by 92.35 %. This gives your net earnings from self-employment. The 7.65 % cut stands in for the employer half that an employer could deduct.
- Apply 12.4 % to net earnings up to $184,500.
- Apply 2.9 % to all net earnings.
- Add them up. That is your self-employment tax.
Example: $50,000 profit
| Step | Amount |
|---|---|
| Net profit | $50,000.00 |
| Net earnings (x 92.35 %) | $46,175.00 |
| Social Security (12.4 %) | $5,725.70 |
| Medicare (2.9 %) | $1,339.08 |
| Self-employment tax | $7,064.78 |
| Deduction for half | $3,532.39 |
Income tax comes on top of this. Use the calculator to see both together.
The deduction for half
You can deduct half of your self-employment tax (not counting the extra 0.9 % Medicare) on your Form 1040. It lowers your income tax, not your self-employment tax. In the example above, that takes $3,532.39 off your income before income tax is worked out.
How and when you pay it
You report self-employment tax on Schedule SE and file it with your Form 1040.
No one withholds it for you, so the IRS expects you to pay during the year with quarterly estimated payments (Form 1040-ES) if you expect to owe $1,000 or more. The 2026 due dates are:
- April 15, 2026
- June 15, 2026
- September 15, 2026
- January 15, 2027
If you pay late or too little, the IRS can charge an underpayment penalty.
How to lower it
- Track every business expense. Mileage, phone, equipment and software all lower your profit, and with it both taxes.
- Use the standard mileage rate if you drive for work. For 2026 it is 72.5 cents a mile from January to June and 76 cents from July 1.
- Look at an S corporation only when profit is high. You pay yourself a reasonable salary and take the rest as distributions, which are not subject to self-employment tax. It adds payroll costs and paperwork.
Questions
Is self-employment tax the same as income tax?
No. Self-employment tax pays for Social Security and Medicare. Income tax is a separate tax on your taxable income. Most self-employed people owe both.
Do I pay self-employment tax on a side hustle?
Yes, if your net earnings from it are $400 or more for the year. It does not matter if you also have a W-2 job, although your wages do count toward the Social Security limit.
Can I avoid self-employment tax?
You can lower it, not avoid it. Business deductions lower your profit, and some owners with high profit elect S corporation status to pay part of their income as wages. Talk to a tax professional before you do that.
Does self-employment tax count toward my Social Security benefits?
Yes. The Social Security part of the tax gives you work credits and raises your future retirement benefit, the same way payroll tax does for employees.