Self-Employment Tax for Freelancers: How It Works (2026)
Self-employment tax for 2026: the 15.3% rate, the $400 threshold, the $184,500 Social Security cap, the half-SE-tax deduction, quarterly payments and two worked examples.
When you work for an employer, Social Security and Medicare come out of every paycheck and your employer quietly pays a matching share. When you work for yourself, you pay both halves. That is self-employment tax, and for most new freelancers it is the surprise on their first tax bill: it applies from the first $400 of profit, before any income tax, and nobody withholds it for you.
This guide explains the rate, what it is charged on, how the $184,500 Social Security cap and the half-SE-tax deduction work, and how to pay it during the year so it does not arrive as one large bill in April. Federal figures are for tax year 2026 and were checked against IRS pages on November 2, 2026.
This is general information, not tax advice. For your own numbers, talk to a CPA or enrolled agent.
Self-employment tax at a glance (2026)
| Rate | 15.3%: 12.4% Social Security + 2.9% Medicare |
| Who owes it | Net earnings from self-employment of $400 or more |
| Charged on | 92.35% of your net profit (the regular method) |
| Social Security cap | $184,500 of combined wages, tips and net self-employment earnings |
| Medicare cap | None. Extra 0.9% above $200,000 single, $250,000 married filing jointly |
| Form | Schedule SE, filed with Form 1040 |
| Deduction | Half of the tax (the employer-equivalent part), for income tax only |
| How you pay | Quarterly estimated tax with Form 1040-ES |
What self-employment tax is
The IRS describes self-employment tax as Social Security and Medicare taxes for people who work for themselves, similar to what is withheld from most wage earners. An employee pays 7.65% and the employer pays another 7.65%. A self-employed person is both, so the rate is the two halves added together: 15.3%.
It applies to sole proprietors, independent contractors, single-member LLCs taxed as sole proprietorships, and general partners. It applies no matter how old you are, and even if you already receive Social Security or Medicare. The Social Security Administration uses the earnings on your Schedule SE to calculate your future benefits, so the tax also builds your own retirement record.
If you are not sure whether you are an employee or a contractor, start with our guide to 1099 vs W-2. The answer decides whether a client withholds these taxes or you pay them yourself.
Who has to pay it
You owe self-employment tax and must file Schedule SE if your net earnings from self-employment are $400 or more for the year. (Church employees have a separate, lower threshold.)
The $400 test is on net earnings, not on what clients paid you. Net earnings start with your net profit: your business income minus your business expenses, which most freelancers figure on Schedule C. Every legitimate business expense you record lowers your profit, and with it both your income tax and your self-employment tax. That is the main reason freelancers keep proper books rather than a pile of bank statements; we compare the tools in our freelancer accounting software guide.
How it is calculated
Self-employment tax is not charged on your full profit. Under the regular method you:
- Start with net profit from Schedule C (or your share of partnership income).
- Multiply by 92.35% to get net earnings from self-employment. This step stands in for the employer half of the tax an employer would get to deduct.
- Apply 12.4% (Social Security) to net earnings up to the yearly cap, and 2.9% (Medicare) to all net earnings.
- Add the 0.9% Additional Medicare Tax if your earnings pass the threshold for your filing status.
Example 1: a freelancer with $60,000 profit
A designer’s only income in 2026 is freelance work, with $60,000 of net profit after expenses.
| Step | Amount |
|---|---|
| Net profit | $60,000 |
| × 92.35% = net earnings from self-employment | $55,410 |
| × 15.3% = self-employment tax | $8,477.73 |
| Deduction for half of the tax (lowers income tax) | $4,238.87 |
The $8,477.73 is owed on top of income tax. The deduction of $4,238.87 reduces the income that income tax is charged on; it does not reduce the self-employment tax itself.
Example 2: a side business on top of a job
Someone earns $150,000 in W-2 wages and makes $80,000 net profit from consulting on the side.
- Net earnings from self-employment: $80,000 × 92.35% = $73,880.
- The Social Security cap is shared with wages. Only $184,500 − $150,000 = $34,500 of the side income is left under the cap, so the Social Security part is $34,500 × 12.4% = $4,278.
- The Medicare part applies to all of it: $73,880 × 2.9% = $2,142.52.
- Self-employment tax: $6,420.52.
Because combined wages and self-employment income pass $200,000, this person may also owe the 0.9% Additional Medicare Tax, figured on Form 8959. If your wages alone are $184,500 or more, you pay no Social Security part of self-employment tax at all, only the Medicare part.
The deduction for half of the tax
You can deduct the employer-equivalent portion of your self-employment tax, which is one-half of it, when you figure adjusted gross income. It is an “above-the-line” adjustment, so you get it whether or not you itemize.
Two limits to keep in mind:
- The deduction lowers your income tax only. It does not change your net earnings from self-employment or the self-employment tax you owe.
- Employees cannot deduct their share of Social Security and Medicare, so this is one of the few places the tax code treats the self-employed differently from wage earners.
Self-employed people who pay for their own health insurance may also be able to deduct the premiums for income tax purposes. The rules sit in the Form 1040 and Schedule SE instructions.
How and when to pay it
No one withholds self-employment tax from client payments, so you pay it yourself during the year, together with your income tax, through estimated tax payments.
Do you have to pay estimated tax? Individuals, including sole proprietors and partners, generally must if they expect to owe $1,000 or more when they file. You figure the amount with the worksheet in Form 1040-ES, usually starting from last year’s return.
Due dates for 2026 income:
| Income earned | Payment due |
|---|---|
| January 1 to March 31 | April 15, 2026 |
| April 1 to May 31 | June 15, 2026 |
| June 1 to August 31 | September 15, 2026 |
| September 1 to December 31 | January 15, 2027 |
If a due date falls on a weekend or legal holiday, the payment is on time on the next business day. You can pay online, by phone, through the IRS app or your IRS online account, or by mail with the 1040-ES voucher. Paying monthly or weekly is fine as long as enough is in by each quarter’s deadline.
Avoiding the underpayment penalty. Most taxpayers avoid it if they owe less than $1,000 after withholding and credits, or if they paid at least 90% of this year’s tax or 100% of last year’s, whichever is smaller. Special rules apply to some higher-income taxpayers; see IRS Publication 505. If your income arrives unevenly, annualizing it on Form 2210 can lower or remove the penalty.
A simple habit. Move a fixed share of every client payment into a separate tax savings account the day it arrives, and set that share from the 1040-ES worksheet with your real numbers rather than a guess. Accounting software that tracks profit as you go makes the quarterly estimate a five-minute job instead of a weekend.
Ways to lower it legally
- Record every business expense. Software, equipment, a home office that qualifies, business mileage, professional fees and similar costs all reduce net profit, and with it self-employment tax.
- Fund retirement accounts. Contributions to a SEP-IRA or solo 401(k) can lower income tax. Check with your tax advisor how each one interacts with self-employment tax, because the rules differ by plan.
- Consider an S corporation once profit is high. An S corporation owner who works in the business must take a reasonable salary through payroll, which carries Social Security and Medicare like any wage. Profit paid out above that as a distribution is not subject to employment taxes. The IRS can reclassify distributions as wages if the salary is unreasonably low, and an S corporation adds payroll, a separate tax return and other costs. It is a decision for your accountant, not a template. If you do run payroll for yourself, our guide to payroll for one employee compares the cheapest options.
Common mistakes
- Waiting until April. Self-employment tax on a full year of profit is a large bill. Quarterly payments spread it out and avoid the penalty.
- Forgetting it exists. Online tax estimates that only show income tax understate what you owe by about 14% of profit (15.3% of 92.35%).
- Mixing personal and business money. Without clean books, you will miss deductions and overpay. A separate bank account and accounting software fix most of this.
- Assuming a 1099 threshold means no tax. A client only files Form 1099-NEC once it pays you $2,000 or more in 2026, but you owe self-employment tax on all your net earnings from $400, reported or not.
The bottom line
Self-employment tax is 15.3% of 92.35% of your profit, owed from $400 of net earnings, with the Social Security part capped at $184,500 for 2026. Half of it is deductible for income tax. Pay it quarterly, keep good books so your profit is accurate, and talk to an accountant before you change your business structure to reduce it.
More for freelancers: accounting software for freelancers, payroll for one employee and 1099 vs W-2.
Frequently asked questions
What is the self-employment tax rate for 2026?
15.3%: 12.4% for Social Security and 2.9% for Medicare. The Social Security part applies only to the first $184,500 of combined wages, tips and net self-employment earnings in 2026. The Medicare part has no cap, and a 0.9% Additional Medicare Tax applies above $200,000 for single filers ($250,000 married filing jointly).
Do I have to pay self-employment tax if I made less than $400?
No. You owe self-employment tax and file Schedule SE when your net earnings from self-employment are $400 or more. Below that, you do not owe it, though you may still owe income tax and still need to file a return.
Is self-employment tax on top of income tax?
Yes. Self-employment tax covers Social Security and Medicare, and income tax is separate. You can deduct the employer-equivalent half of your self-employment tax when figuring adjusted gross income, which lowers your income tax but not the self-employment tax itself.
When do I pay self-employment tax?
Usually through quarterly estimated tax payments with Form 1040-ES, due April 15, June 15, September 15 and January 15 of the following year. You generally have to pay estimated tax if you expect to owe $1,000 or more when you file.
Sources and updates
Facts in this article were last checked against the official sources below on . Rules and thresholds change, so confirm anything you act on with the official source or a qualified professional. Spot something out of date? Tell us and we will re-check it. How we work: editorial policy.