Calculate Your Self-Employment Tax for 2026

What Is Self-Employment Tax?

Self-employment tax is the combined Social Security and Medicare tax that self-employed people pay. When you work as an employee, you pay half of these taxes through payroll deductions and your employer pays the other half. When you work for yourself, you pay both halves. The total rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. (Rate as of 2026 — IRS source)

This is separate from and in addition to your federal and state income taxes. Many first-time freelancers are shocked to discover that SE tax often exceeds their income tax, especially at lower income levels.

The 92.35% Rule

You do not pay SE tax on your full net self-employment income. The IRS lets you multiply your net income by 92.35% (0.9235) before applying the tax rate. This adjustment mirrors the fact that employers get to deduct their share of employment taxes as a business expense.

For example, if your net self-employment income is $100,000, your SE taxable income is $100,000 x 0.9235 = $92,350. Your SE tax is then $92,350 x 0.153 = $14,130.

The Social Security Cap

For 2026, the Social Security wage base is $168,600 (as of 2026 — SSA source). You only pay the 12.4% Social Security portion on earnings up to this cap. Any self-employment income above $168,600 (after the 92.35% adjustment) is only subject to the 2.9% Medicare tax.

If you also have W-2 wages, those count toward the cap first. So if you earn $100,000 from a job and $100,000 from freelancing, only $68,600 of your SE income would be subject to Social Security tax (since $100,000 of the cap is already used by your wages).

Additional Medicare Tax

High earners pay an additional 0.9% Medicare tax on combined wages and SE income exceeding $200,000 for single filers ($250,000 for married filing jointly) (thresholds as of 2026 — IRS source). This surtax was introduced by the Affordable Care Act and applies only to the amount above the threshold.

The 50% SE Tax Deduction

Here is the good news: you can deduct 50% of your self-employment tax when calculating your adjusted gross income. This deduction appears on Schedule 1 of your Form 1040 and reduces the income that is subject to federal and state income tax. You do not need to itemize to claim this deduction.

Using the example above: if your SE tax is $14,130, you deduct $7,065 from your income before calculating income tax. This effectively reduces the total tax burden of being self-employed.

SE Tax Quick Reference (2026)