Taxes

What Is Self-Employment Tax?

Self-employment tax is the Social Security and Medicare tax paid by people who work for themselves in the United States. The rate is 15.3% (12.4% Social Security plus 2.9% Medicare), because the self-employed pay both the employee and employer shares. It is calculated on 92.35% of net self-employment earnings.

How It Is Calculated

Net earnings × 92.35% × 15.3%. The Social Security part applies only up to the annual wage base, and an additional Medicare tax may apply above certain thresholds.

The Deduction for Half

Self-employed taxpayers can deduct half of their self-employment tax when calculating adjusted gross income, which mirrors how employers deduct their share.

Example

Net earnings of 50,000 give 50,000 × 0.9235 × 0.153 ≈ 7,065 in self-employment tax.

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🔗 Related Terms

FICA Tax Taxable Income Hourly Wage Standard Mileage Rate

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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.