How it's calculated
- Take your net profit (income minus business expenses — Schedule C).
- Multiply by 92.35% — this mirrors the employer half that employees never see.
- Apply 12.4% Social Security (up to the 2026 wage base of $184,500, minus any W-2 wages) and 2.9% Medicare.
- Add 0.9% additional Medicare above $200,000 (single) or $250,000 (married filing jointly).
Example
Net profit of $60,000: $60,000 × 92.35% = $55,410 × 15.3% ≈ $8,478 of self-employment tax. Half of it (about $4,239) is deductible when you work out income tax.
Run your own figures in the self-employment tax calculator — it also estimates income tax and the quarterly payments.
Planning tips
- Set aside 25% to 30% of profit as a starting point, then refine it.
- Price your work with tax in mind — check margins with the profit margin calculator.
- Keep records of every business expense; lower profit means lower SE tax.
Frequently asked questions
Do I pay self-employment tax on a small side hustle?
You owe self-employment tax once your net earnings from self-employment are $400 or more for the year.
Is self-employment tax on top of income tax?
Yes. You pay self-employment tax and regular income tax on your profit. You can deduct half of the self-employment tax when you calculate your income tax.
What is the Social Security wage base for 2026?
$184,500. The 12.4% Social Security part stops above that amount of combined wages and self-employment earnings; the 2.9% Medicare part has no cap.
Written by
Finance Specialist & Editor, VaultlyApps
Researched against primary US sources and reviewed by a finance expert on our team. Written for US readers — general education, not financial, tax or legal advice. Editorial policy · Disclaimer
