Self-Employment Tax Calculator

Use this calculator to estimate self-employment tax owed on your net earnings. Essential for freelancers, independent contractors, and small business owners planning quarterly tax payments and understanding the full tax burden of self-employment income.

What this calculator does

The self-employment tax calculator helps you estimate the Social Security and Medicare tax owed on net self-employment earnings.

It uses:

• net self-employment earnings

This gives you the self-employment tax amount — the combined Social Security and Medicare contribution that self-employed individuals pay in place of the FICA tax withheld from employee paychecks.

Self-Employment Tax Formula

Self-Employment Tax = Net Earnings × 92.35% × 15.3%

Where:

• Net Earnings = self-employment income after business expenses
• 92.35% = the deductible portion of net earnings used to calculate SE tax
• 15.3% = combined SE tax rate (12.4% Social Security + 2.9% Medicare)
• Social Security portion = capped at the annual wage base limit
• Medicare portion = uncapped, with an additional 0.9% above higher income thresholds

Example calculation

If:

• Net self-employment earnings = 50,000

Then:

• Taxable amount = 50,000 × 0.9235 = 46,175
• Self-employment tax = 46,175 × 0.153 = 7,065

On 50,000 in net self-employment earnings, the SE tax owed is approximately 7,065. Half of this (3,533) is deductible from gross income when calculating federal income tax.

What is self-employment tax?

Self-employment tax is the combined Social Security and Medicare tax that self-employed individuals pay on their net earnings. It replaces the FICA tax that employers and employees split for traditional employment income. Self-employed workers pay both the employer and employee portions — which is why the combined rate of 15.3% is roughly double what an employee sees on their pay stub.

Why self-employment tax matters

Understanding SE tax helps you:

• estimate the full tax burden on self-employment income, beyond federal and state income tax
• plan and set aside funds for quarterly estimated tax payments
• understand why net take-home from self-employment is lower than equivalent W-2 income
• claim the deductible half of SE tax against your gross income on your tax return

When to use this calculator

Use this calculator when you want to:

• estimate SE tax owed on freelance, contractor, or business income
• plan quarterly estimated tax payments using IRS Form 1040-ES
• compare the true after-tax value of self-employment versus W-2 work
• budget for tax season as a sole proprietor, partner, or single-member LLC

Common mistakes when calculating self-employment tax

Common mistakes include:

• calculating SE tax on gross revenue instead of net earnings after business expenses
• forgetting the 92.35% adjustment that reduces taxable earnings before applying the 15.3% rate
• ignoring the Social Security wage base cap — only income up to the annual limit is subject to the 12.4% Social Security portion
• failing to deduct half of SE tax from gross income when calculating federal income tax owed

Self-employment tax vs income tax

These are two separate federal taxes that both apply to self-employment earnings.

• Self-employment tax funds Social Security and Medicare at a flat 15.3% rate on net earnings
• Income tax is calculated on taxable income across federal brackets, ranging from 10% to 37%

Self-employed people owe both. Use the Income Tax Bracket Calculator to estimate federal income tax separately from SE tax.

FAQs

What is self-employment tax?

Self-employment tax is the Social Security and Medicare tax paid by self-employed individuals on their net earnings. It replaces the FICA tax that employers and employees split for traditional employment.

How do you calculate self-employment tax?

Multiply net self-employment earnings by 92.35%, then by 15.3%. On 50,000 in net earnings, SE tax is approximately 7,065. Half of SE tax is deductible from gross income when calculating federal income tax.

What is a good rule of thumb for setting aside SE tax?

Many sole proprietors set aside 25% to 30% of net earnings to cover SE tax plus federal and state income tax. The exact figure depends on income bracket, state tax rates, and deductions.

What is the difference between self-employment tax and income tax?

Self-employment tax funds Social Security and Medicare at 15.3% of net earnings. Income tax is calculated separately on taxable income across federal brackets. Self-employed people owe both on the same earnings.