What Schedule SE calculates
Self-employment tax replaces the payroll taxes an employer would normally split with you. The self-employment tax is made up of a 12.4% Social Security tax and a 2.9% Medicare tax, for a combined 15.3% rate on your net self-employment earnings.
Who has to file
You must file Schedule SE if your net self-employment earnings were $400 or more for the year. This may include:
- Freelancers
- Independent contractors
- Sole proprietors
How the self-employment tax math works
Before applying the rates, you multiply your net earnings by 92.35%. The rest of the rates are applied as follows:
| Tax | Rate | Applies to |
|---|---|---|
| Social Security | 12.4% | Net earnings up to $184,500 2026 wage base ($176,100 for 2025) |
| Medicare | 2.9% | All net earnings, no cap |
| Additional Medicare Tax | 0.9% | Your combined wages and net earnings from self-employment above $200,000 (single), $250,000 (married filing jointly), or $125,000 (married filing separately) |
Source: Internal Revenue Service
Say you net $60,000 freelancing this year.
- Calculate taxable self-employment earnings: $60,000 x 92.35% = $55,410
- Calculate Social Security taxes: $55,410 x 12.4% = $6,870.84
- Calculate Medicare taxes: $55,410 x 2.9% = $1,606.89
- Check that you don’t need to pay the additional Medicare tax: $55,410 is well under the threshold, so there’s no additional Medicare tax
- Add all the taxes together for total self-employment tax: $6,870.84 + $1,606.89 = $8,477.73
Note: If you also have a W-2 job, the Social Security wages already taxed during the year count toward the $184,500 cap first, so less of your self-employment income may be subject to the 12.4% tax.
The self-employment tax deduction
You can deduct half of your calculated self-employment tax as an above-the-line adjustment to income. That deduction mirrors the employer-equivalent share a traditional employer would otherwise pay on your behalf, and it lowers your taxable income even if you don’t itemize.
Sources of your Schedule SE income
Sole proprietors and independent contractors pull their net profit from Schedule C. Partners use their Schedule K-1 share, and farmers use Schedule F. Whichever applies to you, that net profit figure is what flows onto Schedule SE to calculate the tax you owe.
