How Self-Employment Tax Works in 2026

If you freelance, contract, or run a one-person business, you owe self-employment (SE) tax. Here is how it works in 2026 — and how to keep it as low as legally possible.

What self-employment tax is

SE tax is your contribution to Social Security and Medicare. A W-2 employee pays 7.65% and the employer matches it; when you work for yourself you are both the employee and the employer, so you pay the full 15.3%.

How it is calculated (2026)

• Only 92.35% of your net profit is subject to SE tax.
• 12.4% Social Security on net earnings up to $184,500.
• 2.9% Medicare on all net earnings, plus 0.9% on amounts over $200,000 (single).

You owe SE tax once your net self-employment earnings reach $400. Estimate yours with the self-employment tax calculator.

The deductions that lower it

SE tax is based on profit, so every legitimate business expense reduces it: the home-office deduction, business mileage, health-insurance premiums, software and supplies. And remember — half of your SE tax is itself deductible when you figure your federal income tax.

See how SE tax fits alongside income tax in your full take-home pay breakdown.