Self-Employment Tax
The 15.3% Social Security and Medicare tax paid by the self-employed, covering both employer and employee shares.
What does self-employment tax mean?
Because they’re both employer and employee, the self-employed pay the full 15.3% on 92.35% of net earnings, though they can deduct half against income tax. It’s usually paid through quarterly estimated taxes.
Related terms
Self-Employment Tax — frequently asked
How much is self-employment tax?
It is 15.3% of net self-employment earnings — 12.4% Social Security up to the annual wage cap plus 2.9% Medicare. It covers both the employee and employer halves of FICA that a job would normally split.
Can I deduct self-employment tax?
Yes. You deduct half of your self-employment tax as an above-the-line adjustment, which lowers your AGI (though not the self-employment tax itself). It offsets the employer-share portion you effectively pay.