TL;DR: Self-employment tax is 15.3 percent, but it is charged on $78,498 of an $85,000 profit, not the whole $85,000, because the law first takes 92.35 percent of your net earnings. The result is an effective 14.13 percent on money you invoiced, and a W-2 worker earning the same $85,000 pays $6,502. That $5,508 gap is the employer half you are paying yourself. Run your own numbers in the calculator.
How the 15.3 Percent Is Actually Applied
Publication 334 gives the pieces in this order, and the order is where the money is:
- Net earnings are 92.35 percent of your profit. That is line 4a of Schedule SE, and it exists so you are not taxed on the employer share. On $85,000 of Schedule C profit it is $78,498.
- 12.4 percent Social Security layer on that figure, but only on the first $184,500 of combined wages, tips and net earnings in 2026. The 2025 ceiling was $176,100.
- 2.9 percent Medicare layer on all of it, with no ceiling.
- 0.9 percent Additional Medicare Tax once combined income passes $200,000 ($250,000 joint, $125,000 married filing separately).
$78,498 at 12.4 percent is $9,734, and at 2.9 percent is $2,276. Together that is $12,010, or 14.13 percent of the $85,000 you billed.
The W-2 Job That Deletes Half Your Bill
This is the mechanic self-employed people with a day job miss most expensively, in the other direction. The 12.4 percent layer is charged on combined wages plus net earnings up to $184,500. If a W-2 employer has already withheld Social Security on wages at or above that, the Social Security layer on your side work is zero and only the 2.9 percent Medicare part applies.
A nurse working staff shifts at $184,500 of wages who picks up $30,000 of 1099 shift work on the side pays $803 in self-employment tax on that side income, not $4,239. The same $30,000 with no day job costs roughly $4,239. Nothing changes about the work; only the ordering of the wage base does.
Self-Employment Tax Calculator (2026)
Rates and limits are Publication 334 as published for 2026: 15.3% on 92.35% of profit, the 12.4% layer stopping at $184,500 of combined wages and net earnings, and the 0.9% Additional Medicare Tax above $200,000 ($250,000 joint, $125,000 married filing separately). Educational tool, not personal tax advice.
Worked Example: $85,000 of Contract Work, No Job
- Net earnings, 92.35 percent of profit: $78,498
- Social Security at 12.4 percent: $9,734
- Medicare at 2.9 percent: $2,276
- Self-employment tax: $12,010, which is 14.13 percent of $85,000
- Deductible half, on line 15 of Schedule 1: $6,005
- Roughly $3,003 a quarter if you want to avoid an underpayment penalty
- A W-2 worker on the same $85,000 pays $6,502: $5,508 less
The deductible half is a real offset and it is not a refund. It shrinks the income that federal brackets run on, and at a 22 percent marginal rate $6,005 of deduction returns about $1,321 of tax. That is why the honest all-in cost of being 1099 sits between 14.13 percent and something closer to 11 percent, depending on your bracket and your deductions.
Who Has to File, and When the Tax Is Owed
Publication 334 sets the floor: you file a return for the year if your net earnings from self-employment were $400 or more, even if you are below every other filing threshold. Under that, you owe no self-employment tax but you may still have to file for other reasons.
There is no employer holding anything back, so the tax is paid in four estimated installments on the same dates as everyone else’s: April 15, June 15, September 15 and January 15 of the following year. The IRS’s own guidance is that you generally need to make those payments if you expect to owe $1,000 or more when the return is filed. Skipping them does not defer the cost, it adds a penalty on top.
Frequently Asked Questions
Is self-employment tax 15.3 percent of my whole income?
No. It is 15.3 percent of 92.35 percent of net profit, which is 14.13 percent of profit, and the 12.4 percent part stops once combined wages and net earnings pass $184,500.
Do I get the employer half back?
You deduct half of the SE tax on line 15 of Schedule 1, as an adjustment to income. You do not get a credit for it, and it is not refundable.
What if I have both a W-2 and contract work?
Your wages consume the $184,500 first, so the contract income may only owe the 2.9 percent Medicare layer. The calculator has a box for exactly that.
Does an LLC change this?
A single-member LLC is still you, and the profit still carries 15.3 percent. Being taxed as an S corporation is the one structure that moves it, because wages you pay yourself attract the normal split and the remaining distribution does not attract the Social Security layer.
Is mileage a deduction against this?
Yes, on Schedule C before you get to net profit, which lowers both the income tax and the self- employment tax. The 2026 mileage calculator runs that side.
Do I pay self-employment tax on investment income or a stipend?
No. The tax runs on net earnings from self-employment. Interest, dividends, capital gains and an accountable-plan reimbursement are not that.
Sources
- IRS Publication 334, Tax Guide for Small Business: The 15.3% rate split, the 92.35% regular method, the $400 filing floor, the deduction for half the tax on Schedule 1 line 15, the 0.9% Additional Medicare thresholds and the 2026 maximum net self-employment earnings of $184,500.
- IRS Topic No. 554, Self-Employment Tax: Who files Schedule SE and the same wage-base interaction with employment income.
- IRS, About Schedule SE (Form 1040): The worksheet the calculator mirrors, line by line.
- IRS, Estimated Taxes: The $1,000 rule and the four payment dates.
Next step: Set the estimated payment up while it is still April. The IRS estimated-tax page has the four dates and the safe-harbor math.
Related guides
Every rate on this page is read from Publication 334 as published for 2026. The same checked-figure approach we use for travel nurse taxes, applied to any contract work.
- Mileage Deduction Calculator 2026The Schedule C deduction that lowers this bill before it is figured
- 1099 vs W-2: Which Contract Actually Pays More?The same 15.3 percent, run against a staff paycheck
- Take-Home Pay CalculatorWhere the SE tax leaves the check before it reaches your bank
- Tax Preparer Fees 2026: What a Multi-State Return CostsWhat it costs to have a professional file Schedule C
- Saver's Credit Calculator 2026The one credit that claws some of the 15.3 percent back
- Quarterly Estimated Tax 2026: Dates, Amounts, PenaltyThe self-employment tax number is line 11c of the estimated tax worksheet, so this is where the two calculators meet
- Are Scrubs and Work Clothes Tax Deductible in 2026?A Schedule C deduction is worth the self-employment rate plus the income tax on top of it
- Travel Nurse Tax Deductions Worksheet 2026 (W-2 vs 1099)The 15.3 percent is what makes a surviving Schedule C line worth more than a deduction
- Is Shift Differential Taxed? 2026 Rules and CalculatorOn a 1099 a differential is a price, not a pay practice, and 15.3 percent applies
- Can You Use Net Operating Losses to Offset Capital Gains?A loss that carries forward does not undo the self-employment tax already paid on an earlier year, which is what this page prices
- 2026 Tax Bracket Calculator: Your Real Rate, Not Your BracketSelf-employment profit is stacked on top of your wages and taxed at the rate of the band it reaches, so the second job's dollars are rarely taxed at 10 percent