How Self Employment Tax Is Calculated
SE tax = Net profit × 92.35% × 15.3%
- Net profit = business income − business expenses (Schedule C).
- Taxable base = net profit × 92.35%, which removes the employer half of FICA.
- Social Security = 12.4% of the base up to $184,500, minus W-2 wages already taxed.
- Medicare = 2.9% of the whole base, plus 0.9% above $200,000 single or $250,000 joint.
Profit under $400 owes no self-employment tax. Schedule SE reports the calculation.
Self Employment Tax and Income Tax
Self-employed workers pay 2 federal taxes: self-employment tax and income tax. Half of the self-employment tax is deducted from income before income tax.
| Net profit | SE tax | Total federal tax | Quarterly payment |
|---|---|---|---|
| $25,000 | $3,532.39 | $4,245.77 | $1,061.44 |
| $40,000 | $5,651.82 | $7,932.71 | $1,983.18 |
| $60,000 | $8,477.73 | $12,989.07 | $3,247.27 |
| $80,000 | $11,303.64 | $18,830.24 | $4,707.56 |
| $100,000 | $14,129.55 | $25,745.30 | $6,436.32 |
| $150,000 | $21,194.33 | $43,385.01 | $10,846.25 |
Single filer, standard deduction, no state income tax, no qualified business income (QBI) deduction. The QBI deduction lowers income tax, not self-employment tax.
Quarterly Estimated Tax Payments
Quarterly estimated tax payments are due April 15, June 15, September 15 and January 15, on Form 1040-ES. A self-employed worker who expects to owe $1,000 or more must pay quarterly to avoid an underpayment penalty.
The FICA Tax Calculator compares the self-employed rate with the employee rate.
Self Employment Tax by State
Self employment tax is the same federal 15.3% in every state; the state changes only the income tax added on top.
| State | SE tax | State income tax | All tax on $60,000 |
|---|---|---|---|
| Texas | $8,477.73 | $0 | $12,989.07 |
| Arizona | $8,477.73 | $1,394.03 | $14,383.09 |
| Pennsylvania | $8,477.73 | $1,711.87 | $14,700.93 |
| Illinois | $8,477.73 | $2,760.18 | $15,749.24 |
Single, $60,000 of profit, flat state rate applied to profit minus half of the SE tax. Some cities also tax self-employment income; they are not included.
Self Employment Tax Married Filing Jointly
Married filing jointly does not change self employment tax, which is figured per person; it changes the income tax and the Additional Medicare threshold.
On a joint return, $60,000 of profit still owes $8,477.73 of SE tax. Total federal tax falls to $10,833.84, against $12,989.07 single, because the joint standard deduction is larger.
- Two self-employed spouses: each files a separate Schedule SE on their own profit.
- Additional Medicare Tax: 0.9% starts at $250,000 of combined earnings on a joint return, against $200,000 single.
Self Employment Tax With a W-2 Job
W-2 wages use up the Social Security wage base first, so a worker with a job and a side business pays the 12.4% part only on the room left below $184,500.
- Side business, $20,000 profit, $50,000 of wages: SE tax is $2,825.91, the full rate, because the wages are far below the base.
- $60,000 profit, $170,000 of wages: only $1,798 of Social Security is due on the profit, plus $1,606.89 of Medicare and $228.69 of Additional Medicare.
Enter the job's wages in the calculator to apply the cap. Medicare at 2.9% has no cap.
Deductions That Lower Self Employment Tax
Only business expenses on Schedule C lower self employment tax, because they lower net profit. Other deductions cut income tax alone.
- Lower SE tax: supplies, software, a home office, business mileage or vehicle costs, phone and internet used for the work, and other ordinary business costs.
- Lower income tax only: the deduction for half of SE tax, the standard deduction, the QBI deduction, SEP or solo 401(k) contributions and self-employed health insurance.
Each $1,000 of business expense saves $141.30 of SE tax below the wage base, plus income tax at the marginal rate.
Self Employment Tax for DoorDash and Gig Drivers
Delivery and rideshare drivers are independent contractors who pay self employment tax on profit after car costs. Earnings arrive on Form 1099-NEC or Form 1099-K, with no tax withheld.
A driver who earns $30,000 and has $8,000 of car expenses has $22,000 of profit. That profit owes $3,108.50 of SE tax and $3,543.08 of total federal tax as a single filer, or $885.77 a quarter.
Car costs are claimed with the IRS standard mileage rate or with actual expenses. A mileage log written during the year is the record the IRS expects.
How to Avoid an Underpayment Penalty
A self-employed worker avoids the underpayment penalty by paying, across the 4 quarterly payments, at least 90% of this year's tax or 100% of last year's tax.
- Higher income: the prior-year test rises to 110% when last year's AGI was over $150,000 ($75,000 married filing separately).
- Owe under $1,000: no penalty applies after withholding and credits.
- Uneven income: the annualized income method on Form 2210 can lower a penalty when most profit came late in the year.
A worker with a W-2 job can raise withholding on Form W-4 instead of sending quarterly payments; withholding counts as paid evenly through the year.
Frequently Asked Questions
How much is self employment tax?
Self employment tax is 15.3% of 92.35% of net profit, about 14.13% of profit: 12.4% Social Security and 2.9% Medicare.
Is self employment tax calculated on AGI?
No. Self employment tax is calculated on net self-employment profit from Schedule C, not on adjusted gross income.
Is self employment tax calculated after the QBI deduction?
No. The qualified business income deduction lowers income tax only. Self employment tax uses profit before the QBI deduction.
How much tax will I pay self employed on $60,000?
You pay $12,989.07 of federal tax on $60,000 of profit as a single filer in 2026: $8,477.73 self-employment tax plus income tax.
How is self employment tax calculated for a sole proprietor?
A sole proprietor takes Schedule C net profit, multiplies it by 92.35%, then by 15.3% on Schedule SE. The Social Security part stops at the wage base.
Do married couples pay self employment tax together?
No. Each spouse pays self employment tax on their own profit, even on a joint return; only the income tax is combined.
Do I pay self employment tax on dividends?
No. Dividends, interest and capital gains are investment income, not self-employment earnings. They can owe income tax and, at high incomes, the 3.8% net investment income tax.
Can I deduct half of my self employment tax?
Yes. Half of SE tax is an adjustment to income that lowers income tax: $4,238.87 on $60,000 of profit. It does not lower the SE tax itself.
How do I work out gross to net when self employed?
Start from net profit: gross receipts minus business expenses. Self-employment tax is 15.3% of 92.35% of that profit, and half of it is deducted before income tax. Income tax then applies after the standard deduction, and what remains is your net.