Self-Employment Tax Calculator
Calculate self-employment tax (Social Security and Medicare) for freelancers, contractors, and business owners. Understand SE tax, deductions, and quarterly payment requirements.
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About This Calculator
Self-employment tax is the Social Security and Medicare tax that self-employed individuals must pay on their net business income. Unlike employees who split these taxes with their employers, self-employed individuals pay both the employer and employee portions - a combined 15.3% on most income. Understanding SE tax is crucial for freelancers, contractors, gig workers, and small business owners.
What Is Self-Employment Tax? Self-employment tax consists of two components that mirror FICA taxes for employees:
- Social Security: 12.4% (6.2% employee + 6.2% employer)
- Medicare: 2.9% (1.45% employee + 1.45% employer)
- Total: 15.3% on net self-employment income
Who Pays Self-Employment Tax:
- Freelancers and independent contractors
- Sole proprietors
- Partners in partnerships
- Single-member LLC owners
- Gig economy workers (Uber, DoorDash, etc.)
- Anyone with net SE earnings of $400 or more
Key SE Tax Concepts:
- Calculated on 92.35% of net SE income
- Social Security portion capped at wage base ($168,600 for 2024)
- Medicare has no cap (plus 0.9% additional tax for high earners)
- Half of SE tax is deductible from income tax
Planning Opportunities:
- Retirement contributions reduce taxable income
- S-Corp election can reduce SE tax
- Business deductions lower SE tax base
- QBI deduction (20%) for qualifying income
This calculator helps estimate your self-employment tax liability. For more tax planning, see our QBI Deduction Calculator. For quarterly payments, visit our Quarterly Tax Calculator.
How to Use the Self-Employment Tax Calculator
- 1Enter your gross self-employment income (all 1099s combined).
- 2Input your deductible business expenses.
- 3Add any other income (W-2 wages, investments, etc.).
- 4Select your tax filing status.
- 5Enter retirement contributions if applicable.
- 6Input self-employed health insurance premiums paid.
- 7Review your SE tax breakdown and total tax liability.
- 8Note the quarterly payment amounts and due dates.
- 9Consider tax-saving strategies suggested in the results.
- 10Consult a tax professional for complex situations.
How Self-Employment Tax Works
Understanding SE tax calculation helps you plan and budget appropriately.
The 15.3% Tax Rate Explained
| Component | Employee Pays | Employer Pays | Self-Employed Pays |
|---|---|---|---|
| Social Security | 6.2% | 6.2% | 12.4% |
| Medicare | 1.45% | 1.45% | 2.9% |
| Total | 7.65% | 7.65% | 15.3% |
The 92.35% Calculation
Why Not 100%?
- Employees don't pay tax on employer's portion
- Self-employed get equivalent benefit
- SE tax calculated on 92.35% of net SE income
Example:
- Net SE income: $100,000
- SE taxable income: $100,000 × 0.9235 = $92,350
- SE tax: $92,350 × 15.3% = $14,130
Social Security Wage Base
2024 Limits:
- SS taxed on income up to $168,600
- Medicare has no income limit
- Above wage base, only Medicare (2.9%) applies
High Earner Example:
- Net SE income: $200,000
- SE taxable: $200,000 × 0.9235 = $184,700
- SS tax: $168,600 × 12.4% = $20,906
- Medicare: $184,700 × 2.9% = $5,356
- Total SE tax: $26,262
Additional Medicare Tax
High earners pay an extra 0.9% Medicare tax on income above thresholds.
Additional Medicare Tax Thresholds
| Filing Status | Threshold |
|---|---|
| Single | $200,000 |
| Married Filing Jointly | $250,000 |
| Married Filing Separately | $125,000 |
| Head of Household | $200,000 |
How It Works
Applies To:
- Self-employment income over threshold
- Combined with wages if you have both
- Only on amounts exceeding threshold
Example (Single, High Earner):
- W-2 wages: $150,000
- Net SE income: $100,000
- SE taxable: $92,350
- Total wages + SE: $242,350
- Over threshold: $42,350
- Additional Medicare: $42,350 × 0.9% = $381
Planning Strategies
To Minimize Additional Medicare Tax:
- Defer income to future years if possible
- Maximize retirement contributions
- Consider S-Corp election
- Time income strategically around marriage/divorce
Deducting Half of SE Tax
One significant benefit is deducting half of SE tax from your income.
How the Deduction Works
Above-the-Line Deduction:
- Deduct 50% of SE tax from gross income
- Reduces adjusted gross income (AGI)
- Benefits everyone (don't need to itemize)
- Mirrors employer's deduction for their share
Impact on Taxes
Example:
- Net SE income: $80,000
- SE tax: $80,000 × 0.9235 × 15.3% = $11,304
- SE tax deduction: $11,304 ÷ 2 = $5,652
- AGI reduction: $5,652
- Tax savings (24% bracket): $5,652 × 24% = $1,357
What the Deduction Affects
| Item | Impacted by SE Deduction? |
|---|---|
| AGI | Yes, reduces it |
| Taxable income | Yes |
| QBI deduction phase-out | Yes (lower AGI helps) |
| Medical expense threshold | Yes |
| IRA contribution limits | No |
| SE tax itself | No (calculated before deduction) |
Reporting the Deduction
Where to Claim:
- Form 1040, Schedule 1 (Adjustments)
- Line 15: "Deductible part of self-employment tax"
- Automatically calculated on Schedule SE
Quarterly Estimated Tax Payments
Self-employed individuals must pay taxes quarterly, not just at year end.
Why Quarterly Payments?
Pay-As-You-Go System:
- IRS expects taxes paid throughout year
- Penalties for underpayment
- Similar to employer withholding
Payment Due Dates
| Quarter | Income Period | Due Date |
|---|---|---|
| Q1 | January - March | April 15 |
| Q2 | April - May | June 15 |
| Q3 | June - August | September 15 |
| Q4 | September - December | January 15 |
Safe Harbor Rules
Avoid Penalties If You Pay:
- 100% of prior year tax liability, OR
- 90% of current year tax liability, OR
- 110% of prior year tax if AGI > $150,000
Calculating Quarterly Payments
Simple Method: Estimated annual tax ÷ 4 = Quarterly payment
Annualized Income Method:
- For variable income
- More complex but may reduce payments
- Calculate actual income per quarter
Payment Methods
| Method | Details |
|---|---|
| IRS Direct Pay | Free, from bank account |
| EFTPS | Free, schedule in advance |
| Credit/Debit Card | 1.87-2.35% fee |
| Check by Mail | Send with Form 1040-ES |
Strategies to Reduce SE Tax
Several legitimate strategies can lower your self-employment tax burden.
S-Corporation Election
How It Works:
- Form business as S-Corp or elect S-Corp taxation
- Pay yourself a "reasonable salary" (subject to SE tax)
- Take remaining profits as distributions (no SE tax)
Example:
-
SE income (sole prop): $150,000
-
SE tax: ~$21,000
-
Same income as S-Corp:
-
Salary: $80,000 (FICA: ~$12,200)
-
Distributions: $70,000 (no SE tax)
-
Savings: ~$8,800
Requirements:
- Must pay "reasonable compensation"
- IRS scrutinizes low salaries
- Additional administrative costs
- May not benefit lower incomes
Retirement Contributions
Reduce AGI (but not SE tax directly):
| Plan | 2024 Limit |
|---|---|
| SEP-IRA | 25% of compensation, up to $69,000 |
| Solo 401(k) | $23,000 + 25%, up to $69,000 |
| SIMPLE IRA | $16,000 + 3% match |
Maximize Business Deductions
Common Deductions:
- Home office deduction
- Business vehicle expenses
- Equipment and supplies
- Professional services
- Health insurance premiums
- Business travel
- Continuing education
Hire Your Spouse
If Legitimate:
- Can provide benefits that reduce your taxable income
- Health insurance through spouse's employment
- Retirement plan contributions
- Must be for actual work performed
Common SE Tax Mistakes
Avoid these frequent errors that can cost you money or trigger IRS attention.
Mistake 1: Not Paying Quarterly
Problem:
- Year-end tax surprise
- Underpayment penalties
- Cash flow crunch
Solution:
- Set aside 25-30% of income
- Make quarterly payments
- Use separate business account
Mistake 2: Forgetting SE Tax in Pricing
Problem:
- Pricing based only on income tax
- SE tax reduces effective hourly rate
- Unexpected 15.3% hit to income
Solution:
- Factor 15.3% into pricing
- Charge enough to cover all taxes
- Adjust rates annually
Mistake 3: Not Deducting Business Expenses
Problem:
- Paying SE tax on gross income
- Missing legitimate deductions
- Higher tax than necessary
Solution:
- Track all business expenses
- Keep receipts and records
- Learn what's deductible
Mistake 4: Misclassifying Workers
Problem:
- Treating employees as contractors
- IRS can reclassify
- Back taxes, penalties, interest
Red Flags:
- Controlling how work is done
- Providing equipment
- Setting hours
- Single client relationships
Mistake 5: Missing the Half Deduction
Problem:
- Not claiming 50% SE tax deduction
- Overpaying income tax
Solution:
- Always file Schedule SE
- Deduction calculated automatically
- Review Form 1040 Schedule 1
Pro Tips
- 💡Set aside 25-30% of income immediately for taxes.
- 💡Make quarterly estimated payments to avoid penalties.
- 💡Always file Schedule SE to get the 50% deduction.
- 💡Track all business expenses to reduce your SE tax base.
- 💡Consider S-Corp election if net income exceeds $50,000-$80,000.
- 💡Use a separate bank account for business income and tax savings.
- 💡Contribute to SEP-IRA or Solo 401(k) to reduce income taxes.
- 💡Review pricing to ensure it covers the 15.3% SE tax.
- 💡Keep detailed records of business miles and home office space.
- 💡Deduct self-employed health insurance premiums.
- 💡Pay yourself first - treat tax savings like any other business expense.
- 💡Consult a tax professional before making S-Corp election decisions.
Frequently Asked Questions
The self-employment tax rate is 15.3%, consisting of 12.4% for Social Security (on income up to $168,600 in 2024) and 2.9% for Medicare (on all income). High earners also pay an additional 0.9% Medicare tax on income above $200,000 (single) or $250,000 (married).
