How to Use This Tool
Enter your net profit from self-employment. If you also had wages, put those in too — they use up the Social Security wage base first, which changes the answer.
Why it is not 15.3% of your profit
The headline rate is right and the base is not. Self-employment tax applies to 92.35% of net profit, not to all of it, so the effective figure on ordinary profits is 14.13%.
The reason is fairness between employees and the self-employed. An employee is taxed on wages, and the employer's matching 7.65% is not part of those wages. A sole trader has no employer, so the law removes an equivalent slice first: 1 − 0.0765 = 0.9235.
On $100,000 of profit:
- Net earnings: $92,350
- Social Security at 12.4%: $11,451.40
- Medicare at 2.9%: $2,678.15
- Total: $14,129.55, which is $1,170.45 less than a naive 15.3%
Half of it is deductible
You deduct one half of the self-employment tax against your income tax. It is an adjustment to income rather than an itemised deduction, so you get it whether or not you itemise.
On $100,000 of profit that is a $7,064.77 deduction. At a 22% marginal rate it saves $1,554.25 of income tax, so the real cost of the $14,129.55 bill is closer to $12,575. That is a genuine reduction and it is not a refund — it lowers taxable income, not tax, so the saving is the deduction times your marginal rate.
The wage base, and the cliff that is not a cliff
The 12.4% Social Security portion applies only up to the wage base — $184,500 for 2026. Because of the 92.35% adjustment, that is reached at $199,783 of net profit.
Above it, the marginal self-employment rate drops from 15.3% to 2.9%, since only Medicare continues. This is the one place in the tax code where earning more genuinely gets cheaper, and it surprises people who have been budgeting 15.3% all year.
Wages count first. If you earned $150,000 in W-2 wages and $80,000 of self-employment profit, your wages have already used most of the wage base, so far less of the profit is exposed to the 12.4% part. Missing that is the most common way this calculation goes wrong for people with both kinds of income.
What comes after
- Additional Medicare tax. A further 0.9% on combined wages and self-employment income above $200,000 single or $250,000 married filing jointly. Those thresholds are not inflation-indexed and have not moved since 2013.
- Income tax on top. Self-employment tax is payroll tax, entirely separate from income tax. A freelancer in the 22% bracket is paying roughly 22% plus 14.13% on the same profit, which is why setting aside a quarter to a third is the standard advice.
- Quarterly estimated payments. There is no employer withholding, so the tax is due as you earn it.
- The QBI deduction may reduce income tax on the same profit, though not self-employment tax.
Figures are for tax year 2026 and change annually. This is arithmetic for planning, not tax advice — Schedule SE has more cases than this page models.
