Self-employment tax calculator for 2026

How self-employment tax is worked out

At a regular job, Social Security and Medicare come out of every paycheck. Your employer pays the same amount again on top. When you work for yourself, you are both sides, so you pay the full 15.3%.

The IRS softens that in two ways. First, you only pay it on 92.35% of your profit. That trims off the "employer half" the same way a boss would never pay tax on their own share. Second, you can deduct half of the tax when you work out your income tax.

Here's the whole sum for $50,000 of profit:

• $50,000 × 92.35% = $46,175 gets taxed
• Social Security: $46,175 × 12.4% = $5,726
• Medicare: $46,175 × 2.9% = $1,339
• Self-employment tax: $7,065, and $3,532 of it comes off your income for income tax

That's the part people miss. It comes before income tax, and it starts on the first dollar. There's no standard deduction for it.

Does a W-2 job lower it?

Only if you earn a lot. Social Security stops at $184,500 of combined pay in 2026. Your W-2 wages use up that limit first. So if your job pays $150,000, only $34,500 of your side profit still gets the 12.4% part. Medicare never stops.

When don't you pay it?

If 92.35% of your profit is under $400, you owe no self-employment tax at all. You still report the income, and it can still add income tax.

Can you lower it legally?

The main way is to claim every real business cost, because the tax is on profit, not on what clients pay you. Mileage is often the biggest one for gig workers. Retirement accounts like a SEP IRA lower your income tax, but not this tax. Very high earners sometimes save by running the business as an S corporation, which is worth asking an accountant about once profit is well into six figures.