What is Self-Employment Tax?
The 15.3% US tax paid by freelancers covering both the employer and employee portions of Social Security and Medicare.
What Is Self-Employment Tax?
In the US, self-employment (SE) tax is a 15.3% tax that covers Social Security (12.4%) and Medicare (2.9%). As an employee, you pay half (7.65%) and your employer pays the other half. As a freelancer, you pay both halves yourself.
How It's Calculated
SE tax applies to 92.35% of your net self-employment income (a built-in deduction for the "employer equivalent" portion):
SE Tax = Net Earnings × 0.9235 × 0.153
Example: $60,000 net earnings × 0.9235 × 0.153 = $8,478 in SE tax
The SE Tax Deduction
You can deduct half of your SE tax from your gross income, reducing your taxable income for federal income tax purposes:
Deductible Amount = SE Tax ÷ 2 = $4,239 (in the example above)
SE Tax Thresholds
Quarterly Payments
SE tax is paid as part of your quarterly estimated tax payments. Missing quarterly deadlines can result in IRS underpayment penalties.
Related Calculators
Self-Employment Tax Calculator
Estimate your self-employment tax (SE tax), federal income tax, and total tax bill as a freelancer or independent contractor.
Quarterly Tax Calculator
Calculate how much to pay in quarterly estimated taxes to avoid IRS underpayment penalties as a freelancer.
Take-Home Pay Calculator
Calculate your true freelance take-home pay after self-employment tax, income tax, business expenses, health insurance, and retirement contributions.
Related Terms
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