How is self-employment tax calculated?
Schedule SE takes 92.35% of your net profit, then charges 12.4% for Social Security and 2.9% for Medicare. On $60,000, that's $55,410 of net earnings, $6,870.84 for Social Security, and $1,606.89 for Medicare. You pay both the employee and employer shares, which is why it feels heavy next to a W-2 job.
SE tax = (net profit × 92.35%) × 15.3%, with the 12.4% part stopping at the wage baseNet earnings under $400 owe no self-employment tax. The 12.4% stops once wages and net earnings reach $184,500, the 2026 wage base on Schedule SE. The 2.9% keeps going, and a further 0.9% Additional Medicare Tax applies above $200,000 for single filers. You then deduct half of the Schedule SE tax, $4,239 here, when figuring income tax.
| Net profit | SE tax | Income tax | Total federal | Set aside |
|---|---|---|---|---|
| $10,000 | $1,413 | $0 | $1,413 | 14% |
| $25,000 | $3,532 | $713 | $4,246 | 17% |
| $40,000 | $5,652 | $2,281 | $7,933 | 20% |
| $60,000 | $8,478 | $4,511 | $12,989 | 22% |
| $80,000 | $11,304 | $7,527 | $18,830 | 24% |
| $100,000 | $14,130 | $11,616 | $25,745 | 26% |
| $150,000 | $21,194 | $22,191 | $43,385 | 29% |
| $200,000 | $28,234 | $33,346 | $61,580 | 31% |
| $250,000 | $29,851 | $46,572 | $76,424 | 31% |
How does a W-2 job change self-employment tax?
Your wages use up the Social Security wage base first. With $170,000 of wages, only $14,500 of room is left, so $30,000 of side income owes $2,601 of self-employment tax rather than $4,239. If your wages and net earnings together stay under the wage base, you pay the full rate on the business.
Income tax is the bigger surprise. The side profit lands on top of your salary, so it's taxed at your top rate, not your average one. Withholding can cover this. Our calculator counts federal tax withheld from wages toward what you must pay, and Form 1040-ES says that asking your employer to withhold more may let you avoid estimated payments.
How much should I pay each quarter, and when?
You generally need to pay in, during the year, the smaller of 90% of this year's tax or 100% of last year's. Using our $60,000 example with no withholding, the 90% test comes to $11,690, or $2,922.54 a quarter. If last year's tax was $9,000, you could pay $9,000 instead, or $2,250.00 a quarter. That rule rises to 110%, or $9,900, if last year's AGI was over $150,000 ($75,000 if married filing separately).
| Payment | Due | To avoid a penalty | To cover it all |
|---|---|---|---|
| Payment 1 | April 15, 2026 | $2,922.54 | $3,247.27 |
| Payment 2 | June 15, 2026 | $2,922.54 | $3,247.27 |
| Payment 3 | September 15, 2026 | $2,922.54 | $3,247.27 |
| Payment 4 | January 15, 2027 | $2,922.54 | $3,247.27 |
Meeting the safe harbor avoids the penalty, not the tax. In this example, you'd still owe about $1,299 when you file if you only paid the required amount. Keep that money aside.
You don't need estimated payments if you'd owe under $1,000 after withholding, or if withholding already meets the required amount. The January payment is optional if you file by February 1, 2027 and pay what's due. The penalty is figured for each period separately, so a late start costs more than a steady plan. If your income came late in the year, Publication 505 explains the annualized method, which this tool doesn't model.
Which deductions lower self-employment tax?
Only business expenses lower it, because they reduce net profit. Retirement plan contributions and self-employed health insurance don't, though they do lower income tax. This is the trap: $5,000 of each isn't worth the same. On our example, $5,000 of business expenses saves $1,264 in federal tax. $5,000 into a retirement plan saves $600, though you keep the money.
The IRS business mileage rate was 72.5 cents a mile for January to June 2026, and 76 cents from July to December. So 10,000 miles split evenly deducts $7,425. You can use the mileage rate or actual car costs, with rules on switching, so keep a log.
The qualified business income deduction can take up to 20% off qualifying income, here lowering federal tax by $952, but only income tax, not self-employment tax. It has limits at higher incomes and for some service businesses. This tool applies a simple 20% below the threshold, and it leaves out the $400 minimum deduction that starts in 2026.
What if I file jointly with a spouse who has wages?
Self-employment tax is figured per person, so your spouse's wages don't use up your wage base. They do raise your income tax rate. With $60,000 of profit, a spouse earning $70,000, two children, and $6,000 withheld, the joint federal bill here is $14,809, about 25% of profit, because the child credits already cover the tax on your spouse's wages.
If you both have self-employment income, each of you files your own Schedule SE. This calculator handles one business owner, so run the second person separately for the Schedule SE part.
When will this estimate be off?
Expect differences if you have farm or church income, use the optional methods, owe alternative minimum tax, have investment income over the thresholds, or run the business through an S corporation, which works differently. State tax here is a flat rate you choose, so check our state income tax calculator. To price your work so you cover all of this, try the freelance rate calculator. A CPA or enrolled agent can check your numbers, and IRS Publication 334 covers small business basics.
Common questions
What is the self-employment tax rate for 2026?
15.3% on 92.35% of net profit: 12.4% for Social Security up to $184,500 of combined earnings, and 2.9% for Medicare with no cap. Over $200,000 for single filers ($250,000 joint), a further 0.9% applies.
Do I pay self-employment tax on 1099 income?
Generally yes, on net profit after expenses, if your net earnings are $400 or more. A 1099-NEC reports gross pay, so subtract your business expenses first.
Is self-employment tax on top of income tax?
Yes. They're separate. Self-employment tax funds Social Security and Medicare. Income tax is figured on your whole return, after deducting half of the self-employment tax and your standard or itemized deduction.
How much should I set aside for taxes?
Run your own numbers, because it depends on your income and other wages. In the table above, the federal share runs from 17% of profit at $25,000 to 29% at $150,000, before state tax. That's for a single filer with no other income.
What happens if I miss a quarterly payment?
You may owe an underpayment penalty, figured separately for each period. Paying as soon as you can reduces it. It's added when you file, or the IRS can figure it for you.
Is the 2027 wage base included?
No. This tool uses 2026 figures. The IRS hasn't published its full 2027 figures as of this writing.
Sources
- Schedule SE (Form 1040), 2026 · Internal Revenue Service
- Form 1040-ES, Estimated Tax for Individuals, 2026 · Internal Revenue Service
- Publication 505, Tax Withholding and Estimated Tax · Internal Revenue Service
- Publication 334, Tax Guide for Small Business · Internal Revenue Service
- Self-employment tax (Social Security and Medicare taxes) · Internal Revenue Service
- Standard mileage rates · Internal Revenue Service