Self-employment tax, explained simply
Self-employment tax is Social Security and Medicare for people who work for themselves. It's the biggest reason a freelancer's tax bill is larger than an employee's on the same income.
How it's calculated
- Start with your net profit from Schedule C.
- Multiply by 92.35%. That's the part the tax applies to.
- Apply 12.4% Social Security, up to $184,500 in 2026 (minus any W-2 wages).
- Apply 2.9% Medicare on all of it, plus 0.9% more above $200,000 ($250,000 married filing jointly).
The deductions that soften it
You deduct half of your self-employment tax when working out your income tax. Most freelancers also get the qualified business income (QBI) deduction, worth up to 20% of profit. Both are built into our calculator.
The biggest lever is still your write-offs: every legitimate business expense reduces both self-employment tax and income tax.
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Frequently asked questions
Do I pay self-employment tax if I made under $400?
No. If your net earnings from self-employment (profit × 92.35%) are under $400, you don't owe self-employment tax, though the income may still be subject to income tax.
Is self-employment tax on top of income tax?
Yes. You pay both. Self-employment tax covers Social Security and Medicare; income tax is based on your brackets after deductions.
Sources
Related
- How much to set aside for taxes on 1099 income (2026)
- 2026 quarterly estimated tax deadlines for freelancers
Estimates and general information, not tax advice. Check with a tax professional for your situation.