Self-Employment Tax Calculator

Self-employment tax covers Social Security (12.4%) and Medicare (2.9%) for people who work for themselves. As both the employer and employee, you pay the full 15.3% on 92.35% of your net self-employment income. The 92.35% adjustment accounts for the employer-equivalent portion of the tax.

Self-employment tax is separate from federal income tax. SE tax funds Social Security and Medicare, while income tax goes to general government revenue. You pay both on your self-employment earnings. The good news: you can deduct half of your SE tax when calculating your adjusted gross income.

If your self-employment income exceeds $200,000 (single) or $250,000 (married filing jointly), you owe an additional 0.9% Medicare tax on the amount above the threshold. This is on top of the standard 2.9% Medicare tax.

The Qualified Business Income (QBI) deduction under Section 199A lets eligible self-employed individuals deduct up to 20% of their qualified business income. Most sole proprietors and single-member LLCs qualify if their taxable income is below $191,950 (single) or $383,900 (married filing jointly) for 2024.

Schedule SE is the IRS form used to calculate self-employment tax. It computes your Social Security and Medicare tax based on your net earnings from self-employment. You file it along with your Form 1040 and can deduct 50% of the calculated SE tax from your gross income.

You can reduce the income subject to SE tax by deducting legitimate business expenses (home office, equipment, supplies, mileage, insurance). Forming an S-corporation may also help, as you only pay SE tax on your reasonable salary, not distributions. Consult a tax professional for your specific situation.