Self-Employment Tax Calculator 2026

What Is Self-Employment Tax?

Self-employment (SE) tax is how freelancers, independent contractors, and sole proprietors pay into Social Security and Medicare. Unlike W-2 employees who split FICA taxes with their employer, self-employed individuals pay both the employer and employee portions — a combined 15.3% rate (12.4% Social Security + 2.9% Medicare) on 92.35% of net self-employment income.

The 92.35% factor exists because the IRS adjusts for the fact that employees don't pay FICA on the employer's portion. It's a small but meaningful reduction that lowers your SE tax base.

How SE Tax Is Calculated Step by Step

1. Gross income: Total revenue from freelance, contract, or business work
2. Subtract expenses: Business expenses you deduct on Schedule C (home office, supplies, software, mileage, etc.)
3. Net SE income: Gross minus expenses
4. Multiply by 92.35%: This is your SE tax base
5. Apply 15.3% rate: 12.4% Social Security (up to $176,100 cap) + 2.9% Medicare (no cap)
6. Deduct half: You get to deduct 50% of SE tax from your AGI — an above-the-line deduction

2026 Social Security Wage Cap

The Social Security portion (12.4%) only applies to combined wages and SE income up to $176,100 (projected for 2026). If you have a W-2 job that already covers some of this cap, less of your SE income is subject to the 12.4% rate. Medicare has no cap — all SE income is subject to the 2.9% rate, plus an additional 0.9% on earnings above $200,000 (single) or $250,000 (married filing jointly).

Quarterly Estimated Tax Payments

Unlike W-2 employees whose taxes are withheld each paycheck, self-employed individuals must make quarterly estimated tax payments to the IRS using Form 1040-ES. Missing or underpaying these can result in penalties.

The safe harbor rule: you won't owe penalties if you pay at least 100% of last year's tax liability (110% if your AGI was above $150,000) or 90% of the current year's liability, whichever is less.

Common Schedule C Deductions for Freelancers

Reducing your net SE income through legitimate business deductions directly lowers both your SE tax and income tax. Common deductions include:

• Home office: Simplified method ($5/sq ft, up to 300 sq ft = $1,500) or actual expenses
• Health insurance premiums: 100% deductible if self-employed and not eligible for employer plan
• Software and tools: Subscriptions, equipment, professional tools
• Vehicle / mileage: 67 cents/mile (2026 projected) for business use
• Professional development: Courses, conferences, certifications
• Retirement contributions: SEP-IRA (up to 25% of net SE income), Solo 401(k)

Self-Employed vs. W-2 Employee: Tax Comparison

Self-employed workers pay roughly 7.65% more in FICA taxes than W-2 employees, because they cover the employer's half. However, they can deduct half of SE tax from their AGI and have access to deductions that W-2 employees don't (home office, business expenses, retirement accounts with higher limits).

As a rule of thumb, a freelancer earning $100,000 net needs to set aside roughly 25–30% for taxes (SE + federal + state), compared to a W-2 employee whose employer handles half the FICA burden.

Frequently Asked Questions

Do I need to pay SE tax if I have a W-2 job too?

Yes, if your net SE income is $400 or more. However, your W-2 wages count toward the Social Security wage cap ($176,100), so you may pay less Social Security tax on your SE income. You'll still owe the full Medicare portion.

What if my SE income is under $400?

If your net self-employment income is less than $400, you don't owe SE tax and don't need to file Schedule SE. You may still need to report the income on your tax return.

Can I deduct my home office?

Yes, if you use a dedicated space in your home regularly and exclusively for business. The simplified method gives you $5 per square foot (max $1,500). The regular method calculates actual expenses (rent, utilities, insurance) proportional to business use.

What's the QBI deduction?

The Qualified Business Income (QBI) deduction allows eligible self-employed individuals to deduct up to 20% of qualified business income. This calculator does not include QBI — consult a tax professional to determine if you qualify, as it depends on your income level and business type.

How do I see just the federal income tax portion?

Our Federal Income Tax Calculator gives a detailed bracket-by-bracket breakdown. If you also earn W-2 wages, the Paycheck Calculator shows your take-home pay from that job.