How self-employment tax works
If you work for yourself, you pay both halves of Social Security and Medicare — what's called self-employment tax. The rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare.
- You're taxed on 92.35% of your profit. The IRS lets you knock off 7.65% first, so you multiply net profit by 0.9235.
- Social Security (12.4%) applies up to the annual wage base — $184,500 in 2026 ($176,100 in 2025). Earnings above that aren't hit by the Social Security portion.
- Medicare (2.9%) has no cap. High earners pay an extra 0.9% above $200,000 (single) or $250,000 (married filing jointly).
- Half is deductible. You deduct 50% of your SE tax from your income before figuring income tax.
- Tips are deductible from income tax (2025–2028). Under the One Big Beautiful Bill Act, up to $25,000 of qualified tips comes off your income — but not your SE tax, and the break phases out above $150,000 ($300,000 married filing jointly).
- The QBI deduction takes another 20% off. Section 199A lets most self-employed people deduct 20% of qualifying business income before income tax. This calculator applies it; it doesn't model the high-income phase-outs.
How to lower it
Self-employment tax is calculated on your net profit — income minus deductible business expenses. Every legitimate write-off you track shrinks your profit and your tax:
- Mileage and vehicle costs
- Home office
- Software, equipment, and supplies
- Phone, internet, and marketing
Most people miss a chunk of these because tracking them by hand is a part-time job. RevvFi catches them automatically — bank sync, receipt scanning, and mileage tracking in one app.
Estimate only — not tax advice. This calculator gives a simplified estimate of federal self-employment tax and a rough federal income tax figure using current-year rates. It includes the standard deduction, the half-SE-tax deduction, the §199A QBI deduction, the OBBBA qualified-tips deduction, and the Child Tax Credit. It does not model QBI phase-outs or specified-service-business (SSTB) limits, other credits, itemized deductions, or state and local taxes, so your actual tax may differ. Consult a qualified tax professional for advice specific to your situation.