What is self-employment tax?

Self-employment tax is the combined Social Security (12.4%) and Medicare (2.9%) tax — totaling 15.3% — paid by self-employed individuals on their net business income. Employees have this split with their employer (7.65% each); self-employed workers pay both halves.

Do I pay SE tax on every dollar I earn?

You pay SE tax on your NET self-employment income (revenue minus legitimate business deductions), not your gross revenue. The Social Security component (12.4%) applies only on income up to $176,100 (2025). Medicare (2.9%) applies to all net SE income, with an additional 0.9% above $200,000 for individuals.

How is SE tax different from income tax?

SE tax is for Social Security and Medicare specifically. Income tax (federal and state) is a separate calculation based on your total taxable income. You pay both — SE tax AND income tax on your self-employment earnings. The SE tax cannot be reduced by income tax deductions.

Can I reduce my self-employment tax?

You can reduce net SE income by maximizing legitimate business deductions. You cannot reduce the SE tax rate (15.3% on net income). You can deduct 50% of SE tax paid from gross income, reducing your income tax. A Solo 401k or SEP-IRA contribution reduces net SE income on which SE tax is calculated.

What percentage should I set aside for taxes as a freelancer?

For most freelancers earning $50,000–$150,000, set aside 25–30% of gross income for all taxes (SE + federal income + state). At lower income ($30K–$50K), 20–25% is usually sufficient. At higher income ($150K+), 35–40% may be needed. Use the SE tax calculator with your specific numbers for precision.

How to Use a Self-Employment Tax Calculator: Beginner Guide

Self-employment tax is the most commonly miscalculated expense for freelancers and independent contractors. Unlike employees whose employer pays half of Social Security and Medicare taxes, self-employed workers pay both halves — a combined 15.3% on net self-employment income. A self-employment tax calculator makes this concrete and tells you exactly what to set aside.

What Self-Employment Tax Is (and Isn’t)

Self-employment tax (SE tax) is the Social Security and Medicare tax paid by self-employed individuals. It consists of: 12.4% Social Security tax on net SE income up to $176,100 (2025 wage base) plus 2.9% Medicare tax on all net SE income. Total: 15.3% below the wage base, 2.9% above it. This is in addition to federal and state income tax — not a replacement for it.

Self-employment tax rates and 2025 limits

Tax Component	Rate	Applies To	2025 Cap
Social Security (employee + employer)	12.4%	Net SE income	Up to $176,100
Medicare (employee + employer)	2.9%	All net SE income	No cap
Additional Medicare Tax	0.9%	Income above $200K (single)	No cap
Total SE Tax (below SS wage base)	15.3%	Net SE income	Includes both components

ℹ️The SE Tax Deduction

You can deduct 50% of your self-employment tax from your gross income on Schedule 1. This deduction partially offsets the SE tax burden — at 22% federal bracket, the deduction saves approximately 22% × 50% of SE tax = 11% of SE tax. You still pay the full SE tax, but your income tax is lower.

Using the Calculator: Inputs

You need: (1) Net self-employment income — your revenue minus allowable business deductions (not gross revenue). (2) Filing status — affects income tax calculation. (3) Other income — W-2 jobs, spouse income, investment income all affect your total tax bracket. (4) Business deductions — home office, vehicle, equipment, health insurance all reduce your SE income base.

Sample SE Tax Calculation

Sample self-employment tax calculation for $85,000 gross revenue freelancer

Item	Amount	Notes
Gross freelance revenue	$85,000	All client payments received
Business deductions	($18,000)	Home office, equipment, software, mileage
Net SE income	$67,000	Gross minus deductions
SE tax (15.3%)	$10,251	On 92.35% of net SE income
SE tax deduction (50%)	($5,126)	Deducted from gross income
Taxable income (approx.)	$61,874	Net SE − SE deduction − other deductions
Federal income tax (approx.)	$8,600	At 22% bracket
Total federal tax liability	$18,851	SE tax + income tax

Calculate Your SE Tax Liability

Enter your net self-employment income to see your exact SE tax, income tax, and what to set aside from every client payment.

Open Self-Employment Tax Calculator →

How to Use a Self-Employment Tax Calculator: Beginner Guide

What Self-Employment Tax Is (and Isn’t)

Using the Calculator: Inputs

Sample SE Tax Calculation

Frequently Asked Questions

Frequently Asked Questions