Question 1

What is the self-employment tax rate for 2026?

Accepted Answer

The self-employment tax rate is 15.3% on net self-employment earnings up to $168,600 (the Social Security wage base). This consists of 12.4% Social Security and 2.9% Medicare. Above $168,600, only the 2.9% Medicare portion applies. Additionally, high earners pay an extra 0.9% Medicare surtax on earnings above $200,000 (single) or $250,000 (married).

Question 2

How do I calculate self-employment tax?

Accepted Answer

Step 1: Determine net profit from self-employment (revenue minus business expenses). Step 2: Multiply net profit × 0.9235 (92.35%) to account for the employer-equivalent deduction. Step 3: Multiply that result × 0.153 (15.3%) for the SE tax. Step 4: Deduct half of the SE tax from your gross income when calculating income tax. For example: $80,000 net profit → $80,000 × 0.9235 = $73,880 × 0.153 = $11,304 SE tax.

Question 3

Why is self-employment tax 15.3% instead of 7.65%?

Accepted Answer

W-2 employees pay only 7.65% FICA because their employer covers the other 7.65% as a business expense. As a self-employed person, you are both the employee and the employer, so you pay both halves — totaling 15.3%. To partially compensate, the IRS allows you to deduct half of your SE tax (the "employer" portion) from your adjusted gross income, reducing your income tax bill.

Question 4

When do self-employed people pay taxes?

Accepted Answer

Self-employed individuals generally must pay quarterly estimated taxes to avoid underpayment penalties. 2026 due dates: Q1 (Jan–Mar) on April 15, Q2 (Apr–May) on June 15, Q3 (Jun–Aug) on September 15, Q4 (Sep–Dec) on January 15 2027. You must make quarterly payments if you expect to owe $1,000 or more in taxes beyond withholding.

Question 5

What business expenses reduce self-employment tax?

Accepted Answer

Self-employment tax is calculated on net profit (revenue minus deductible business expenses). Common deductible expenses that reduce SE tax: home office, business equipment, vehicle (business use), health insurance premiums (for the self-employed), professional services, business travel, marketing, and software/subscriptions. Maximizing deductible expenses reduces both SE tax and income tax.

Question 6

Can I reduce self-employment tax with a retirement plan?

Accepted Answer

Retirement contributions like SEP-IRA (up to 25% of net earnings, max $70,000) and Solo 401(k) reduce your federal income tax but do NOT reduce self-employment tax — because SE tax is calculated on net self-employment income before retirement deductions. However, health insurance premiums paid by the self-employed are deductible above-the-line and can reduce taxable income.

Self-Employment Tax Calculator 2026

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