The 15.3% Self-Employment Tax, Explained Line by Line (2026)
The 15.3% rate is quoted everywhere but rarely broken down. It's actually two taxes — 12.4% Social Security and 2.9% Medicare — applied to 92.35% of your net profit, not the full amount. Run your exact figure with the self-employment tax calculator.
Why it's 92.35%, not 100%
Employers pay half of FICA, and that half isn't taxed. To put the self-employed on equal footing, the IRS lets you multiply net earnings by 92.35% before applying the rate — a built-in 7.65% discount.
The Social Security half: 12.4%
This applies up to the wage base ($176,100 for 2026 per SSA). Above that cap, the 12.4% portion stops — which is why very high earners pay a lower effective SE rate.
The Medicare half: 2.9%
No cap here — it applies to all SE earnings. If your total income exceeds $200,000 (single) or $250,000 (married filing jointly), an extra 0.9% Additional Medicare Tax kicks in on the excess.
The deduction most people miss
You deduct half of your SE tax from your adjusted gross income — the 'employer half.' On $5,000 of SE tax, that's a $2,500 deduction even if you take the standard deduction.
A worked example
On $60,000 of net profit: SE-taxable base is $55,410, SE tax is about $8,478, and the deductible half is $4,239. That deduction alone saves roughly $900+ in income tax for someone in the 22% bracket.
Frequently asked questions
+Is self-employment tax on top of income tax?
Yes. SE tax funds Social Security and Medicare; income tax is calculated separately on your taxable income.
+Can I avoid self-employment tax?
Not on genuine SE profit, but every deductible expense reduces it. S-corp election can reduce it for higher earners, with added complexity.
+Do I pay SE tax on a loss year?
No. SE tax only applies to net profit of $400 or more.
Ask about this article
Answers are grounded in “The 15.3% Self-Employment Tax, Explained Line by Line (2026)”. Educational info, not tax advice.
About the author
Javed Niamat · Founder & Editor, GigTax
Javed Niamat founded GigTax to make self-employment tax math understandable for rideshare drivers, delivery couriers, creators and freelancers. He builds and maintains every calculator on this site and writes the guides that explain the numbers behind them.
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