TooziWhat is my self-employment tax?
Self-employment tax is the 15.3% most new freelancers forget about. Enter your profit and, if you have one, your W-2 wages; the calculator shows the Social Security and Medicare pieces and the half you get back as a deduction.
Below $400 of net profit there is no self-employment tax. Social Security stops at the 2026 wage base; W-2 wages use up that room first.
Why it is 15.3%
An employee pays 7.65% for Social Security and Medicare and the employer pays the other 7.65%. When you work for yourself you are both, so you pay both halves: 12.4% Social Security plus 2.9% Medicare on 92.35% of your profit.
Social Security stops at the annual wage base. Medicare never stops, and above $200,000 ($250,000 married filing jointly) an extra 0.9% Additional Medicare Tax kicks in.
If you also have a W-2 job
Your employer already paid Social Security on your wages. Only the room left under the wage base is taxed on your self-employment earnings, which is why high earners with a side business see a much smaller SE tax than the headline rate suggests.
Medicare has no cap, so the 2.9% applies to all of the business profit regardless of wages.
The half you get back
You deduct half of the SE tax on Schedule 1 before income tax is figured. It does not reduce the SE tax itself; it lowers the income tax on top of it. The calculator shows that deduction so you can see the real cost.
Below $400 of net profit there is no SE tax at all, and the income may still be taxable as ordinary income.
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Questions
Is self-employment tax on top of income tax?
Yes. Both apply to the same profit. Income tax depends on your bracket; SE tax is a flat rate until the Social Security wage base.
Can an S-corp lower it?
Often, once profit is well into six figures: wages you pay yourself carry payroll tax, the rest comes out as distributions without SE tax. It adds payroll, a separate return and state fees, so it is a conversation, not a reflex.
Do I pay SE tax on 1099-K income from Etsy or Square?
If it is income from your trade or business, yes, on the profit after expenses. Hobby income and personal item sales are treated differently.
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