Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Self-employment tax exists to cover both the employee and employer halves of Social Security and Medicare, which a traditional employee never sees separately because an employer quietly pays half. A self-employed person owes the whole combined amount directly, which is why the effective rate looks so much higher than a familiar paycheck deduction.
Before you rely on it
What to check
Set aside the self-employment tax estimate in a separate reserve from income tax savings, since both draw from the same net profit but are calculated and paid differently.
The common error
Where people go wrong with self-employment tax calculator
Budgeting only for income tax on self-employment earnings and forgetting self-employment tax entirely. The two are separate obligations calculated on overlapping but distinct bases, and missing either one leaves a real shortfall at filing time.
Sensitivity evidence
How combined SE tax rate changes the estimated self-employment tax
| Combined SE tax rate | Estimated self-employment tax | Deductible half |
|---|---|---|
| 11.3% | $8,348 | $4,174 |
| 13.3% | $9,826 | $4,913 |
| 15.3%worked example | $11,304 | $5,652 |
| 17.3% | $12,781 | $6,391 |
| 19.3% | $14,259 | $7,129 |
Every input, tested
Which input moves the estimated self-employment tax most
| Input | Tested from | To | Estimated self-employment tax at each end | Swing |
|---|---|---|---|---|
| Combined SE tax rate | 13.3% | 17.3% | $9,826 to $12,781 | $2,955 (26%) |
| Net self-employment profit | $72,000 | $88,000 | $10,173 to $12,434 | $2,261 (20%) |
Two variables at once
Estimated self-employment tax by combined SE tax rate and net self-employment profit
| Combined SE tax rate \ Net self-employment profit | $64,000 | $80,000 | $96,000 |
|---|---|---|---|
| 11.3% | $6,679 | $8,348 | $10,018 |
| 13.3% | $7,861 | $9,826 | $11,791 |
| 15.3% | $9,043 | $11,304 | $13,564 |
| 17.3% | $10,225 | $12,781 | $15,337 |
| 19.3% | $11,407 | $14,259 | $17,111 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Net self-employment profit | $80,000 |
| Combined SE tax rate | 15.3% |
| Estimated self-employment tax | $11,304 |
| Deductible half | $5,652 |
Where the inputs come from
Net self-employment profit is revenue minus business expenses, from Schedule C or your books, before the self-employment tax deduction. The combined rate is 15.3%: 12.4% for Social Security on earnings up to the annual wage base and 2.9% for Medicare, and an additional 0.9% Medicare tax applies to high earners. The tax is calculated on 92.35% of net profit. If you also have wages, the Social Security wage base is shared across both.
When the result stops applying
The tax applies before the income tax and is not reduced by the standard deduction. Above the Social Security wage base, only the 2.9% Medicare portion continues. The QBI deduction and retirement contributions such as a SEP-IRA or solo 401(k) reduce income tax but not self-employment tax, except that some deductions change the profit. State rules differ, and S corporation owners pay payroll tax on salary instead.
What to compare it with
Estimate the income tax with the federal income tax calculator, and the QBI deduction page for the 20% pass-through deduction. The paycheck and tax withholding calculators help employees, while quarterly payments for the self-employed follow the projected total. The take-home pay page shows what employees keep.
People also ask
Frequently asked questions
Why is self-employment tax 15.3%?
Employees pay 7.65% and their employers match it, and self-employed people pay both halves, 12.4% for Social Security and 2.9% for Medicare.
Can I deduct self-employment tax?
You can deduct half of it when calculating adjusted gross income, which lowers your income tax but not the self-employment tax itself.
Do I have to pay estimated taxes?
Generally yes if you expect to owe $1,000 or more, paying quarterly to avoid underpayment penalties, since no employer withholds for you.