What Is the Self-Employment Tax Rate? (2025)

The self-employment tax rate is 15.3 percent. That breaks into 12.4 percent for Social Security, which applies to net earnings up to the 2025 wage base of $176,100, and 2.9 percent for Medicare, which has no cap. You pay it on 92.35 percent of your net self-employment profit once that profit reaches $400 for the year, and you get to deduct half of what you pay as an adjustment to income.

What the 15.3 percent is made of

Self-employment tax exists because Social Security and Medicare are normally split between an employer and an employee. When you work for yourself, you are both, so you pay both halves. The combined rate is 15.3 percent:

The 12.4 percent Social Security piece stops once your combined wages and self-employment earnings reach the $176,100 Social Security wage base for 2025. The 2.9 percent Medicare piece keeps applying no matter how high your income goes, and high earners add another 0.9 percent Medicare tax on the amount above $200,000 (single) or $250,000 (married filing jointly).

You are only taxed on 92.35 percent of your profit

You do not pay the 15.3 percent on your full net profit. Schedule SE first multiplies your net earnings by 0.9235, which removes the portion an employer would have paid and never counted as your wages. The 15.3 percent rate then applies to that smaller number.

Here is a straightforward example on $50,000 of net profit from your Schedule C:

That roughly $7,065 is separate from federal income tax, which you also owe on the profit at your marginal bracket. Our guide to how much tax you pay on 1099 income works through the full stacked bill.

The $400 threshold and where it is reported

You owe self-employment tax and must file Schedule SE once your net earnings from self-employment reach $400 for the year. Below $400 there is no self-employment tax, though you may still owe income tax and have to report the income. The number flows like this: net profit from Schedule C, times 0.9235 on Schedule SE, then the 15.3 percent, with the total carried to Schedule 2 and half of it deducted on Schedule 1.

Because only net profit is taxed, every legitimate business expense you track lowers both your self-employment tax and your income tax. Keeping clean records through the year is the single biggest lever most freelancers have, and it helps to pull the line items off each invoice into a spreadsheet instead of reconstructing totals in April. See our list of self-employed write-offs for what qualifies.

The one-half deduction that softens the blow

To keep the self-employed on roughly even footing with employees, the IRS lets you deduct half of your self-employment tax as an above-the-line adjustment on Schedule 1. In the example above, that is about $3,533 shaved off your income before income tax is figured. You claim it whether or not you itemize. It does not reduce the self-employment tax itself, only the income tax that sits on top.

A few things that do not lower self-employment tax, even though people assume they do: retirement contributions to a SEP-IRA or solo 401(k), and the self-employed health insurance deduction. Both cut income tax but leave the 15.3 percent untouched, because self-employment tax is based on net business earnings before those adjustments.

Planning for it during the year

Since no employer withholds anything, the self-employment tax is a common reason freelancers get a surprise bill. A widely used rule of thumb is to set aside 25 to 30 percent of net profit to cover self-employment plus income tax, and to pay it in through quarterly estimated taxes on Form 1040-ES. Skip the quarterly payments and you can owe an underpayment penalty even if you pay in full at filing.

Frequently asked questions

Do I pay self-employment tax if I already have a W-2 job?

Yes, but your W-2 wages count first against the $176,100 Social Security cap. If your wages already reach the cap, the 12.4 percent Social Security portion does not apply to your self-employment income, though the 2.9 percent Medicare portion still applies to all of your net earnings. You report the self-employment tax on Schedule SE regardless.

Is the 15.3 percent on top of income tax?

Yes. Self-employment tax funds Social Security and Medicare and is entirely separate from federal income tax. A self-employed person owes both on the same profit, which is why setting aside roughly a quarter to a third of net earnings, and paying quarterly, keeps you from a large balance at filing.

Do I owe self-employment tax if I made less than $400?

No. If your net earnings from self-employment are under $400, you owe no self-employment tax and generally do not file Schedule SE. You may still owe income tax on the money and have to report it on Schedule C if you otherwise have a filing requirement.

How can I lower my self-employment tax?

Only expenses that reduce net profit lower it, since the tax is based on net earnings. Track every ordinary and necessary business expense. Retirement contributions and the health insurance deduction cut income tax but not self-employment tax. Electing S corporation status can reduce it for higher earners, but requires paying yourself reasonable W-2 wages.

What is the self-employment tax rate for 2025?

It is 15.3 percent for 2025, made up of 12.4 percent Social Security on earnings up to $176,100 and 2.9 percent Medicare on all earnings, applied to 92.35 percent of your net profit. Earners above $200,000 single or $250,000 married add a 0.9 percent Medicare surtax.

File your self-employed return with TaxFile

TaxFile reads your 1099s, builds your Schedule C and Schedule SE, applies the 92.35 percent rule and the one-half deduction automatically, finds the deductions and 20 percent qualified business income deduction you qualify for, and prepares your federal and state returns for review before filing. This article is general information, not tax advice; for complex situations, consult a CPA or tax professional.