If you work for yourself — as a freelancer, independent contractor, sole proprietor, or single-member LLC owner — you pay self-employment (SE) tax on top of regular income tax. SE tax covers Social Security and Medicare, the same programs funded by FICA withholding for employees. Because you’re both the employer and the employee, you pay both halves. Here’s how the 2026 numbers work.
The 15.3% Rate Breaks Into Two Parts
The headline self-employment tax rate is 15.3%, made up of:
| Component | Rate | Cap |
|---|---|---|
| Social Security (OASDI) | 12.4% | Capped at the 2026 wage base of $184,500 |
| Medicare (HI) | 2.9% | No cap — applies to all net earnings |
| Total | 15.3% |
For an employee, this same 15.3% is split 7.65% / 7.65% between worker and employer. As a self-employed person, you shoulder all 15.3% yourself — but two important mechanics soften the blow.
Mechanic 1: The 92.35% Net Earnings Adjustment
You do not pay SE tax on 100% of your business profit. First you multiply your net profit (from Schedule C) by 92.35% to get your “net earnings from self-employment.” Only that adjusted figure is subject to the 15.3% rate.
The 92.35% factor exists because employees don’t pay the employer’s share of FICA on their own salary, so this adjustment keeps the self-employed on roughly equal footing.
Net earnings from self-employment = Net business profit × 0.9235
If your net earnings from self-employment are less than $400, you owe no SE tax at all.
Mechanic 2: The Social Security Portion Is Capped
The 12.4% Social Security portion only applies to net earnings up to the 2026 wage base of $184,500 (up from $176,100 in 2025). The 2.9% Medicare portion applies to all net earnings with no ceiling.
Once your net earnings exceed $184,500, your marginal SE tax rate drops from 15.3% to just 2.9% (Medicare only) — plus the 0.9% Additional Medicare surtax once you cross $200,000 in earned income (single) or $250,000 (MFJ).
If you also have W-2 wages during the year, those wages use up the Social Security wage base first. Your SE income is only subject to the 12.4% portion up to the remaining gap below $184,500.
Mechanic 3: The Half-SE-Tax Deduction
You can deduct one-half of your self-employment tax as an above-the-line deduction on Schedule 1. This reduces your adjusted gross income (and therefore your income tax), though it does not reduce the SE tax itself. It mirrors the fact that an employer’s share of FICA is a deductible business expense.
Worked Example (2026)
A freelance designer reports $100,000 of net profit on Schedule C.
- Net earnings: $100,000 × 0.9235 = $92,350
- Social Security portion: 12.4% × $92,350 = $11,451.40 (well under the $184,500 cap, so all of it counts)
- Medicare portion: 2.9% × $92,350 = $2,678.15
- Total SE tax: $11,451.40 + $2,678.15 = $14,129.55
- Above-the-line deduction: ½ × $14,129.55 = $7,064.78 reduces AGI
So on $100,000 of profit, this freelancer owes about $14,130 in self-employment tax, separate from federal income tax — but gets to deduct roughly $7,065 against income tax.
A High-Earner Example
A consultant with $250,000 of net profit:
- Net earnings: $250,000 × 0.9235 = $230,875
- Social Security portion: 12.4% is capped at the wage base → 12.4% × $184,500 = $22,878
- Medicare portion: 2.9% × $230,875 = $6,695.38 (uncapped)
- Additional Medicare Tax: 0.9% on earned income above the threshold also applies (reconciled on Form 8959)
Notice the Social Security portion stops growing once net earnings pass $184,500 — only Medicare keeps climbing.
Quarterly Estimated Payments
Self-employment tax is not withheld for you. You generally pay it together with income tax through quarterly estimated tax payments (Form 1040-ES). Missing or underpaying these can trigger an underpayment penalty, so budget for both SE tax and income tax throughout the year.
Key Takeaways
- The 2026 self-employment tax rate is 15.3% = 12.4% Social Security (capped at $184,500) + 2.9% Medicare (uncapped).
- Only 92.35% of your net profit is subject to the tax; below $400 net earnings, you owe nothing.
- You deduct half of your SE tax above the line against income tax.
- Above $184,500 net earnings, your marginal SE rate falls to 2.9% (plus the 0.9% surtax over $200k/$250k).
Use the self-employment tax calculator to run your exact numbers, or the FICA calculator to compare against a W-2 equivalent.