If you freelance, contract, or run a small business, you pay self-employment (SE) tax on your profit in addition to income tax. SE tax covers Social Security and Medicare — the same programs a regular employer splits with W-2 employees. Because you are both employer and employee, you pay both halves. This guide explains the 2026 rates, the exact formula, the deduction that softens the blow, and how to plan quarterly payments. When you are ready to run your own numbers, use the Self-Employment Tax Calculator.
The 2026 rate and wage base
The self-employment tax rate is 15.3%, made of two parts:
- 12.4% Social Security on net earnings up to the 2026 wage base of $184,500.
- 2.9% Medicare on all net earnings, with no cap.
- High earners add a 0.9% Additional Medicare Tax above $200,000 (single) or $250,000 (married filing jointly).
Only 92.35% of your net business profit is subject to SE tax (this adjusts for the employer-half deduction). So the effective rate on profit is a little under 15.3%.
The formula
Social Security tax = min(Net earnings, $184,500) × 12.4%
Medicare tax = Net earnings × 2.9%
Self-employment tax = Social Security tax + Medicare tax (+ 0.9% if high earner)
Deductible half = (Social Security + Medicare) ÷ 2
Worked example: $80,000 of profit
| Net profit | $80,000 |
| Net earnings (× 0.9235) | $73,880 |
| Social Security (12.4%) | $9,161 |
| Medicare (2.9%) | $2,143 |
| Total SE tax | $11,304 |
| Deductible half | $5,652 |
The $5,652 deductible half lowers your income tax, but it does not reduce the SE tax itself.
How to lower it legally
- Deduct every legitimate business expense — SE tax is on profit, not revenue.
- Contribute to a Solo 401(k) or SEP-IRA to reduce taxable income (note: retirement contributions reduce income tax, not SE tax).
- Consider an S-corp election only at higher, steady profits, where reasonable-salary rules can reduce the base — weigh the added cost and complexity.
- Always claim the deductible half of SE tax on your return.
Quarterly estimated payments
The US tax system is pay-as-you-go. If you expect to owe $1,000 or more, make quarterly estimated payments for 2026 by April 15, June 15, September 15, 2026, and January 15, 2027. A simple rule: set aside 25%–30% of net income for SE tax plus income tax. Missing payments can trigger an underpayment penalty — check it with the Estimated Tax Penalty Calculator.
Frequently asked questions
What is the self-employment tax rate for 2026?
15.3%: 12.4% Social Security on net earnings up to the $184,500 wage base, plus 2.9% Medicare with no cap. Since only 92.35% of profit is taxed, the effective rate on profit is slightly under 15.3%.
How do I calculate self-employment tax?
Multiply net profit by 92.35%, then apply 12.4% (up to $184,500) and 2.9%. For $80,000 of profit: net earnings $73,880, Social Security $9,161, Medicare $2,143, total about $11,304.
Can I deduct half of my self-employment tax?
Yes — half of the regular SE tax is an above-the-line deduction that lowers your income tax. The 0.9% Additional Medicare Tax is not deductible, and the deduction does not reduce the SE tax itself.
When are 2026 quarterly estimated taxes due?
April 15, 2026, June 15, 2026, September 15, 2026, and January 15, 2027. Estimated payments are generally required if you expect to owe $1,000 or more.
How much should I set aside for self-employment taxes?
Usually 25%–30% of net income for SE tax plus federal income tax; lean toward 30%–35% at higher incomes, and add more if your state taxes income.
Sources: IRS — Self-Employment Tax; IRS Topic No. 751; SSA Contribution and Benefit Base (2026 wage base $184,500). This guide is educational and not tax advice.