Self-Employment Tax Calculator
Calculate your self-employment tax liability with this comprehensive calculator for freelancers, independent contractors, and business owners. Self-employment tax includes Social Security (12.4%) and Medicare (2.9%) taxes that self-employed individuals must pay - equivalent to both the employee and employer portions of FICA taxes. This calculator computes your SE tax on net business income, factors in the 50% SE tax deduction, calculates federal income tax, and provides quarterly estimated payment recommendations. Accounts for the 2024 Social Security wage base limit ($168,600), Additional Medicare Tax for high earners, and combines W-2 income if you have both. Essential for accurate tax planning and avoiding underpayment penalties.
Gross income minus business expenses
Income from employer (if you also have a job)
Total estimated taxes already paid this year
Children and other qualifying dependents
Qualify for full $2,000 Child Tax Credit
IRA, HSA, student loan interest, etc.
Premiums paid (100% deductible if self-employed)
Your state income tax rate for estimation
What is self-employment tax?
Self-employment (SE) tax is Social Security and Medicare taxes for self-employed individuals, equivalent to FICA taxes for employees. While W-2 employees pay 7.65% and employers pay 7.65% (total 15.3%), self-employed people pay both portions - 15.3% total (12.4% Social Security + 2.9% Medicare). You pay SE tax if you have net self-employment income of $400+ annually. It's calculated on Schedule SE and reported on Form 1040. The good news: you can deduct 50% of SE tax when calculating adjusted gross income.
How is self-employment tax calculated?
Calculation steps: (1) Determine net profit (gross income - business expenses), (2) Multiply by 92.35% (the taxable portion), (3) Apply 15.3% rate: 12.4% Social Security (on first $168,600 in 2024) + 2.9% Medicare (unlimited). Example: $75,000 net profit * 0.9235 = $69,262.50 SE income. Social Security: $69,262.50 * 12.4% = $8,589. Medicare: $69,262.50 * 2.9% = $2,009. Total SE tax: $10,598. You then deduct $5,299 (half) from income when calculating federal taxes.
What is the difference between self-employment tax and income tax?
Self-employment tax and income tax are TWO SEPARATE taxes: SE tax (15.3%) funds Social Security/Medicare - everyone pays regardless of profit level. Income tax (10%-37% brackets) funds general government operations - varies by income and deductions. You pay BOTH as self-employed. Example: $75K profit = $10,598 SE tax + ~$8,000-12,000 income tax = $18,000-22,000 total. W-2 employees pay income tax + 7.65% FICA (their half), while employers pay the other 7.65%. Self-employed pay both halves.
Do I have to pay self-employment tax?
Yes, if you have net self-employment income of $400 or more annually. This includes: Freelancers and independent contractors, Sole proprietors, LLC members (single or multi-member treated as partnership), General partners in partnerships, Gig workers (Uber, DoorDash, Fiverr, etc.), Side hustlers. Exceptions: S-corp owners only pay on W-2 wages (dividends exempt), Hobby income under $400, Real estate rental income (generally not SE tax unless you're a dealer/pro). Even if you owe $0 income tax, you still owe SE tax if you made $400+.
How do I pay self-employment tax?
Self-employment tax is paid via quarterly estimated tax payments (Form 1040-ES) and annual tax return (Form 1040 + Schedule SE). Due dates: Q1 (Jan-Mar): April 15, Q2 (Apr-May): June 15, Q3 (Jun-Aug): September 15, Q4 (Sep-Dec): January 15. Calculate quarterly payments by estimating annual profit, calculating SE tax + income tax, dividing by 4. Pay online at IRS.gov/payments, by mail, or through EFTPS. Underpayment penalties apply if you don't pay 90% of current year tax or 100% of prior year (110% if high income).
Can I deduct self-employment tax?
You can deduct 50% of your self-employment tax when calculating adjusted gross income (AGI) - it's an "above-the-line" deduction. This mirrors the employer portion that W-2 workers don't pay income tax on. Example: $10,000 SE tax means you deduct $5,000 from income. If you're in the 22% bracket, this saves ~$1,100 in income tax. Important: This deduction only applies to income tax calculation, NOT to SE tax itself. You still pay the full 15.3% SE tax on 92.35% of net profit.
What expenses reduce self-employment tax?
Business expenses reduce your net profit, which reduces SE tax. Deductible expenses: Office supplies, equipment, software, Business mileage (67¢/mile in 2024), Home office (if qualified), Professional services (lawyers, accountants), Advertising and marketing, Business insurance, Travel and meals (50% for meals), Health insurance (special deduction), Retirement contributions (SEP-IRA, Solo 401k). These reduce BOTH SE tax and income tax. Track everything! If you have $100K revenue and $30K expenses, you only pay SE tax on $70K profit, saving ~$4,600 in SE tax.
Is self-employment tax deductible on state taxes?
It depends on your state. Most states: The 50% SE tax deduction flows through to state returns since they start with federal AGI. Some states allow additional deductions. No state income tax states: N/A (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming). California: Follows federal - 50% deductible. New York: Follows federal. Check your state's rules. The deduction is automatic if your state uses federal AGI as the starting point for calculations.
How can I reduce my self-employment tax?
Legal strategies to reduce SE tax: Maximize business deductions (home office, mileage, equipment), Contribute to SEP-IRA or Solo 401(k) (reduces income tax, not SE tax directly), Deduct health insurance premiums (self-employed deduction), Form an S-corp if profit is high ($60K+) - pay yourself reasonable W-2 salary (subject to SE tax) and take rest as distributions (no SE tax). Caution: aggressive S-corp salary reduction triggers IRS scrutiny. Hire family members (shift income, they may pay less). There's no way to avoid SE tax entirely if self-employed - it's your Social Security contribution.
What if I have both W-2 income and self-employment income?
You pay SE tax on self-employment income AND FICA on W-2 wages. The Social Security wage base ($168,600 in 2024) is cumulative across all income. Example: $100K W-2 + $50K self-employment. W-2 FICA: $100K * 7.65% = $7,650 (employee portion). SE tax: Social Security applies only to remaining $68,600 ($168,600 - $100K) = $8,506. Medicare on full $50K * 0.9235 * 2.9% = $1,339. Total SE tax: ~$9,845. You get credit for W-2 Social Security already paid. Report both on tax return - the IRS coordinates it.
Do LLC owners pay self-employment tax?
It depends on LLC tax classification: Single-member LLC (default disregarded entity): Yes, full SE tax on profits. Multi-member LLC (default partnership): Yes, each partner pays SE tax on their share. LLC taxed as S-corp: No SE tax on distributions; only W-2 wages are subject to FICA. LLC taxed as C-corp: No SE tax; corporate taxes apply instead. Most small LLC owners pay SE tax. The S-corp election can save SE tax if profit exceeds ~$60K, but requires payroll administration and reasonable salary.
What is the Social Security wage base for self-employed?
The 2024 Social Security wage base is $168,600 - the maximum income subject to the 12.4% Social Security portion of SE tax. Once your self-employment income (or combined W-2 + SE income) exceeds $168,600, you stop paying the 12.4% Social Security tax. Maximum SE tax for Social Security: $168,600 * 92.35% * 12.4% = $19,283. However, Medicare (2.9%) has NO cap - you pay on all income. High earners also pay 0.9% Additional Medicare on income over $200K/$250K.