💼 Self Employment Tax Calculator
Calculate your self-employment tax (Social Security and Medicare) for freelancers, contractors, and small business owners.
Why Use This Calculator?
15.3% SE Tax Calculation
Calculate self-employment tax - 12.4% Social Security (on net earnings up to $168,600) plus 2.9% Medicare (unlimited). On $60k net profit, SE tax is $9,180. Unlike W-2 where employer pays half, self-employed pay full 15.3%.
Half SE Tax Deduction Benefit
Deduct 50% of SE tax from income (employer-equivalent portion). $9,180 SE tax = $4,590 deduction, saving $1,010-1,700 income tax (22-37% brackets). Reduces AGI, potentially qualifying for other credits/deductions.
Net Earnings Calculation
SE tax applies to 92.35% of net profit (after business expenses). $65k revenue - $15k expenses = $50k profit × 92.35% = $46,175 subject to SE tax ($7,065 SE tax). Understanding this multiplier prevents overestimating liability.
Quarterly Estimated Tax Planning
Calculate quarterly SE tax + income tax payments due April 15, June 15, Sept 15, Jan 15. Underpaying triggers 0.5%/month penalty. On $60k net profit, quarterly payments ~$3,400-4,500 total (SE tax + income tax).
Additional Medicare Tax Threshold
Extra 0.9% Medicare tax on earnings over $200k single/$250k married. Total Medicare becomes 3.8% on amounts above threshold. $250k net profit = 2.9% on first $200k + 3.8% on remaining $50k.
QBI Deduction Interaction
Qualified Business Income deduction (up to 20% of profit) reduces income tax but NOT SE tax. $60k profit = $12k QBI deduction saves $2,640-4,440 income tax (22-37% brackets), but still owe full $9,180 SE tax on $60k.
Step-by-Step Guide
Calculate Gross Business Income
Total all 1099-NEC, 1099-K, cash payments, and business revenue. This is gross receipts before any expenses. Include all income sources - client payments, affiliate commissions, product sales, service fees.
Example:
Example: $85k client invoices + $8k affiliate income + $7k product sales = $100k gross
Subtract Business Expenses
Deduct ordinary and necessary business expenses: home office (simplified $5/sq ft up to 300 sq ft), supplies, software subscriptions, advertising, professional fees, insurance, vehicle expenses (mileage at $0.67/mile or actual costs).
Example:
Example: $100k gross - $1,500 home office - $3k software - $5k ads - $2k insurance = $88,500 net
Apply 92.35% Multiplier
Self-employment tax applies to 92.35% of net profit (not 100%). This accounts for the employer half of FICA that W-2 employees don't pay on. Multiply net profit by 0.9235 to get SE tax base.
Example:
Example: $88,500 net profit × 92.35% = $81,709 subject to SE tax
Calculate Social Security Portion
Apply 12.4% to SE earnings up to $168,600 wage base (2024). If you also have W-2 income, combined wages and SE income can't exceed wage base for Social Security. Medicare has no cap.
Example:
Example: $81,709 × 12.4% = $10,132 Social Security tax (under wage base limit)
Calculate Medicare Portion
Apply 2.9% Medicare tax to all SE earnings (no cap). Add 0.9% Additional Medicare Tax on earnings over $200k single/$250k married. Unlike Social Security, Medicare applies to unlimited earnings.
Example:
Example: $81,709 × 2.9% = $2,370 Medicare tax, total SE tax = $10,132 + $2,370 = $12,502
Deduct Half of SE Tax
Deduct 50% of calculated SE tax from gross income on Schedule 1. This reduces AGI and taxable income. $12,502 SE tax ÷ 2 = $6,251 deduction, saving $1,375-2,313 in income tax depending on bracket.
Example:
Example: $88,500 profit - $6,251 SE tax deduction = $82,249 adjusted gross income
Calculate Income Tax on Remainder
Apply regular income tax brackets to AGI minus standard deduction. $82,249 - $14,600 standard = $67,649 taxable income. Calculate tax using progressive brackets (10%, 12%, 22%), not flat rate.
Example:
Example: $67,649 taxable = $1,160 (10%) + $4,266 (12%) + $4,753 (22%) = $10,179 income tax
Add Total Tax Liability
Total taxes = SE tax + income tax + state tax. $12,502 SE + $10,179 income + state (vary) = $22,681+ federal. This is annual liability before any credits. Divide by 4 for quarterly payments.
Example:
Example: $22,681 ÷ 4 = $5,670 per quarterly estimated payment (4 times per year)
Account for QBI Deduction
If qualified, deduct 20% of net profit (after SE tax deduction) from taxable income. Reduces income tax but not SE tax. Subject to phase-outs starting $191,950 single/$383,900 married.
Example:
Example: $82,249 × 20% = $16,450 QBI deduction, reduces taxable income to $51,199
Make Quarterly Estimated Payments
Pay estimated taxes quarterly to avoid underpayment penalty. Due dates: April 15 (Q1), June 15 (Q2), Sept 15 (Q3), Jan 15 next year (Q4). Pay 90% of current year tax or 100% of prior year (110% if AGI >$150k).
Example:
Example: Owe $22,000 annually → pay $5,500 on April 15, June 15, Sept 15, Jan 15
Expert Tips & Strategies
Understand You Pay Both Halves of FICA
W-2 employees pay 7.65% FICA, employer pays matching 7.65% (total 15.3%). Self-employed pay both halves = full 15.3%. On $60k net profit, that's $9,180 vs W-2 employee paying $4,590 with employer covering rest. Factor this into pricing/rates - need 7.65% higher income to match W-2 take-home.
Maximize Business Expense Deductions
Every dollar in legitimate business expenses saves 15.3% SE tax + 12-37% income tax = 27.3-52.3% total. $10k in expenses saves $2,730-5,230 in taxes. Home office, vehicle mileage, health insurance (self-employed deduction), retirement contributions (SEP-IRA up to 25% of net), equipment Section 179 depreciation all reduce net profit and SE tax.
Set Aside 25-35% for Quarterly Taxes
Unlike W-2 withholding, self-employed must save and pay quarterly. Set aside 25-35% of every payment received for taxes (15.3% SE + 10-22% income + state). $50k net profit needs $12,500-17,500 saved. Use separate business checking account, transfer immediately upon receiving payments to avoid spending tax money.
Pay Yourself First via SEP-IRA
SEP-IRA contributions (up to 25% of net profit or $69,000 in 2024) reduce income tax AND count as business expense reducing net profit subject to SE tax. $60k net profit → contribute $15k SEP = saves $2,295 SE tax + $3,300-5,550 income tax = $5,595-7,845 total. Grows tax-deferred.
Consider S-Corp Election at $60k+ Net
S-corps pay reasonable salary (subject to 15.3% SE tax) but remaining profit as distributions (no SE tax). At $100k profit: pay $60k salary ($9,180 SE tax), $40k distribution ($0 SE tax), saves $6,120. Requires payroll, tax returns, costs $2,000-3,000 annually - profitable above $60-80k net typically.
Deduct Health Insurance Premiums
Self-employed can deduct 100% of health/dental/long-term care insurance premiums for self, spouse, dependents on Schedule 1 (reduces AGI). $12k annual premiums = $1,836 SE tax savings + $2,640-4,440 income tax savings = $4,476-6,276 total. Deducted even if taking standard deduction, not itemizing.
Track Quarterly to Avoid Penalties
Underpayment penalty is 8% annualized (0.5% per month) on shortfall. Missing $5,000 in estimated payments costs $400 penalty. Safe harbors: pay 90% of current year OR 100% of prior year tax (110% if prior AGI >$150k). If income spikes mid-year, increase Q3/Q4 payments or owe penalty.
Additional Medicare Tax Above $200k
Earnings over $200k single/$250k married face extra 0.9% Medicare, total 3.8% (2.9% + 0.9%). $250k net profit = 2.9% on first $200k ($5,800) + 3.8% on remaining $50k ($1,900) = $7,700 Medicare vs $7,250 at 2.9% flat. Plan for this jump if approaching thresholds.
Common Mistakes to Avoid
✓ Better approach: Waiting until April to pay all taxes on $80k net profit = $12,240 SE tax + $10k income tax = $22,240 lump sum plus $890+ underpayment penalty. Pay quarterly: $5,560 on April 15, June 15, Sept 15, Jan 15. Set calendar reminders, automate savings 25-35% of each client payment into separate tax account.
✓ Better approach: Driving 15,000 business miles but not logging mileage loses $10,050 deduction ($0.67/mile × 15k miles) = $1,538 SE tax + $2,211-3,719 income tax wasted = $3,749-5,257. Use MileIQ or similar app, log every business trip with purpose. Deduction reduces net profit subject to SE tax + income tax.
✓ Better approach: 300 sq ft dedicated home office × $5/sq ft simplified method = $1,500 annual deduction (or actual expenses method if higher). Saves $230 SE tax + $330-555 income tax = $560-785 annually. Must be exclusive, regular business use space. Even renters qualify. Track square footage and total home size.
✓ Better approach: Applying 15.3% to gross revenue instead of net profit overstates tax. $100k revenue - $25k expenses = $75k net × 92.35% = $69,263 SE base × 15.3% = $10,597 actual SE tax, NOT $100k × 15.3% = $15,300. Deduct ALL ordinary business expenses first, then apply SE tax to net profit.
✓ Better approach: Paying $12,000 SE tax but forgetting to deduct $6,000 (half) from income on Schedule 1 overpays $1,320-2,220 income tax (22-37% × $6,000). This deduction is available to all self-employed, represents employer-equivalent portion. Always claim on Line 15 Schedule 1, reduces AGI automatically flowing to 1040.
✓ Better approach: Missing 20% Qualified Business Income deduction on $80k net profit loses $16k deduction = $3,520-5,920 in income tax savings (22-37% brackets). Doesn't reduce SE tax but significantly cuts income tax. Most self-employed qualify if under income limits ($191,950 single). Calculate on Form 8995, claimed on 1040 line 13.
✓ Better approach: Staying sole proprietor at $120k net profit paying $18,360 SE tax when S-corp could save $6,000-8,000. Example: pay yourself $70k salary ($10,710 SE tax), take $50k distribution ($0 SE tax) = saves $7,650. Requires reasonable salary, adds admin costs $2k-3k. Generally worth it above $60-80k net, run cost-benefit analysis.
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Frequently Asked Questions
What is self-employment tax?
Self-employment (SE) tax is how self-employed individuals pay Social Security and Medicare taxes. Its 15.3% of net earnings (12.4% Social Security + 2.9% Medicare). Employees and employers each pay 7.65%, but self-employed people pay both halves.
How is SE tax different from income tax?
SE tax is separate from income tax. SE tax covers Social Security and Medicare, while income tax is based on your tax bracket. Self-employed people pay both SE tax (15.3%) AND income tax, though you can deduct half of SE tax from income.
What is the SE tax rate?
15.3% total: 12.4% Social Security (on first $160,200 in 2024) and 2.9% Medicare (no limit). High earners pay an additional 0.9% Medicare surtax on income over $200,000 ($250,000 married), making the total Medicare tax 3.8%.
Can I deduct SE tax?
Yes! You can deduct half of your SE tax (7.65%) as an above-the-line deduction when calculating income tax. This reduces your taxable income and partially offsets the SE tax burden. Its an adjustment to income, not an itemized deduction.
When do I pay SE tax?
Self-employed individuals pay quarterly estimated taxes (April 15, June 15, September 15, January 15). Each payment should be 1/4 of your expected annual SE tax plus income tax. Underpayment can result in penalties.
Financial Disclaimer
This calculator is provided for educational and informational purposes only. The results are estimates based on the information you provide and should not be considered as financial, legal, or tax advice.
Actual results may vary based on your specific circumstances, market conditions, and other factors. Always consult with qualified financial, legal, and tax professionals before making any financial decisions.
We make no guarantees about the accuracy, completeness, or reliability of the calculations. Use this tool at your own risk.