How 2026 self-employment tax is worked out
Self-employment tax is the Social Security and Medicare tax that a person in business for themselves pays on net earnings. IRS Topic 554 describes who it covers: a sole proprietor, including an independent contractor, a partner, a member of an LLC taxed as a partnership, and the member of a disregarded single-member LLC. You generally pay it if net earnings from self-employment are $400 or more. It is due even if you already receive Social Security benefits, and it is due however old you are. This page calculates that tax. It does not calculate federal income tax on the profit. The brackets, the qualified business income deduction, and the standard deduction live on the return, and the paycheck page is only for wages.
Topic 554 states the working rule for the base. Generally, the amount subject to self-employment tax is 92.35 percent of net earnings from self-employment. Net earnings, in the ordinary sense of the business, are receipts minus ordinary and necessary expenses. The 92.35 percent step is what Schedule SE then calls net earnings from self-employment. On a profit of $100,000 the result is $92,350. If that figure is under $400, Topic 554 says the tax is generally not due. A profit of $400 produces net earnings of $369.40, which is under the line, so the tax on this page is zero. The page does not apply the optional methods in Part II of Schedule SE, which can produce a small amount of coverage when profits are low. It also does not apply the separate church-employee rule of $108.28.
The rate on those net earnings is the combined employer and employee rate. Topic 751 states Social Security at 12.4 percent in total and Medicare at 2.9 percent in total. Only Social Security has a wage base. For earnings in 2026 that base is $184,500. Topic 751 is the page the IRS updated with that dollar amount. The 2026 draft instructions for Schedule SE say the same maximum. Medicare has no cap. On the $100,000 example, Social Security is 12.4 percent of $92,350, which is $11,451.40, and Medicare is 2.9 percent of $92,350, which is $2,678.15. Self-employment tax is the sum, $14,129.55.
Wages from a job use up the Social Security wage base before the business does. Topic 554 says the law sets a maximum amount of earnings subject to the Social Security portion. If W-2 wages have already been taxed for Social Security, only the leftover room is taxed again on the Schedule SE Social Security line. The form on this page takes one figure for those W-2 wages and uses it both as Social Security wages and as Medicare wages, which is the usual case when the job withheld both. On a $50,000 profit beside $200,000 of W-2 wages, net earnings are $46,175, the Social Security room is zero, and Social Security tax on the business is zero. Medicare at 2.9 percent is still due on the whole $46,175, which is $1,339.08. If the wages and the business use different Social Security and Medicare amounts, this single box is too blunt and the return has to split them.
Additional Medicare Tax is 0.9 percent and it is not part of the 15.3 percent. Topic 560 sets the thresholds at $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for single people, heads of household, and qualifying surviving spouses. This page uses $200,000 for both single and head of household, which matches that grouping. If you have both wages and self-employment income, the threshold for the self-employment portion is reduced by the Medicare wages, but not below zero. A single person with $200,000 of Medicare wages has no threshold left, so the 0.9 percent applies to all $46,175 of net earnings from the example above, which is $415.58. A self-employment loss is ignored for this tax. There is no employer match. The tax is computed on Form 8959, not on Schedule SE.
One-half of the self-employment tax is deductible when you figure adjusted gross income. Topic 554 says so. The deduction is one-half of the Social Security and Medicare portions, the $14,129.55 in the first example, which is $7,064.78. Additional Medicare Tax is not cut in half by that deduction. The page shows the deductible half so you can see it. It does not feed the half into an income-tax calculation, because that calculation needs the rest of the return. It also does not subtract the half before it computes the self-employment tax itself. The 92.35 percent factor is the step that stops the tax from being charged on the deductible half. Doing both would double-count the adjustment.
A few cases are named here so they are not silently dropped. Ministers, members of religious orders, and Christian Science practitioners have their own Social Security rules, including an exemption if the IRS has approved Form 4361. A loss in one business can offset profit in another before Schedule SE sees a combined figure. This page takes the net profit you type and does not combine businesses for you. Estimated tax payments during the year are how many self-employed people pay the tax. The page does not divide the total into quarterly vouchers, because the safe-harbor rules depend on last year's tax. The number to take away is the Schedule SE shape for 2026: 92.35 percent, then 12.4 percent up to what is left of $184,500, then 2.9 percent on all of it, then 0.9 percent only past the Topic 560 threshold.