Calculate your self-employment tax.

What is self-employment tax?

Self-employment tax (SE tax) is the Social Security and Medicare tax that self-employed people pay on their business profits. It replaces the FICA taxes that W-2 employees split with their employer. The total rate is 15.3% (12.4% Social Security + 2.9% Medicare) up to the Social Security wage base, and 2.9% Medicare on income above it. High earners owe an additional 0.9% Medicare tax above $200,000 single or $250,000 married filing jointly.

Why is SE tax calculated on 92.35% of net profit, not 100%?

The 7.65% reduction reflects the employer-equivalent half of FICA that W-2 employees do not include in their taxable Social Security and Medicare wages. The IRS applies the same logic to self-employed people: you only pay SE tax on 92.35% of your net business profit, which puts you on roughly equal footing with employees.

Is half of self-employment tax really deductible?

Yes. The employer-equivalent half of your SE tax is deductible above the line on your federal income tax return. It reduces your adjusted gross income but does not reduce the SE tax itself. The deduction is automatic when you file Schedule SE with your return.

How do I avoid self-employment tax legally?

Electing S-corp status is the most common strategy. As an S-corp, you pay yourself a reasonable W-2 salary (subject to FICA payroll tax) and take the rest as distributions, which are not subject to SE tax. The salary must be defensible with comparable wage data. The election typically pays off above $60,000 to $80,000 in net profit. Other strategies include maximizing retirement contributions and shifting income into expense-generating investments.

Does this calculator include state taxes?

No. This is a federal SE tax calculation only. A few states have their own self-employment-style taxes or higher Medicare add-ons for high earners, but most do not. State income tax is calculated separately on your full net profit, not on a reduced base.