How to Calculate Self-Employment Tax

If you're self-employed, you pay self-employment (SE) tax instead of having an employer withhold FICA taxes (Social Security and Medicare). The SE tax covers both the employee and employer share of these taxes.

The SE Tax Rate

  • Total SE tax rate: 15.3% on net self-employment income
  • Breakdown: 12.4% Social Security + 2.9% Medicare
  • Social Security wage base (2024): $168,600 (above this, only the 2.9% Medicare portion applies)
  • Additional Medicare Tax: 0.9% on earnings above $200,000 (single) or $250,000 (married)

The Calculation Steps

Step 1: Calculate net self-employment income

Net SE Income = Gross Self-Employment Income โˆ’ Business Expenses

Step 2: Calculate the taxable SE base (you only pay on 92.35% to account for the employer deduction)

SE Base = Net SE Income ร— 0.9235

Step 3: Calculate SE tax

SE Tax = SE Base ร— 0.153 (up to Social Security wage base)

Step 4: SE tax deduction (you can deduct half of SE tax from income)

Deduction = SE Tax รท 2

Step-by-Step Example

Net self-employment income: $80,000

  1. SE Base: $80,000 ร— 0.9235 = $73,880
  2. SE Tax: $73,880 ร— 0.153 = $11,304
  3. Deductible half: $11,304 / 2 = $5,652 (reduces your adjusted gross income)

Quarterly Estimated Taxes

Self-employed individuals typically need to pay estimated taxes quarterly (due April, June, September, January) to avoid underpayment penalties.

Use our self-employment tax calculator to estimate your quarterly payments.