Self-employment tax: 12.4% vs 15.3% explained
The 15.3% headline is two taxes stacked on top of each other. One has a ceiling, one does not, and only part of the total is deductible.
15.3% of 92.35% of your net earnings. That is 12.4% Social Security plus 2.9% Medicare. The Social Security half stops at a $192,300 base — about $208,230 of net earnings — while the 2.9% Medicare half never stops. Half of the total is deductible.
Verified 2026-11-07 · SSA 2027 COLA fact sheet
Calculate your self-employment tax
Why the base is 92.35%, not 100%
Employees split the payroll tax with their employer: 6.2% + 6.2% for Social Security and 1.45% + 1.45% for Medicare. The self-employed person stands on both sides of that transaction. Rather than charge the full 15.3% on every dollar of profit, the law treats 7.65% of net earnings as the employer's share and removes it from the base. What remains is 92.35%, and the full 15.3% is applied to that reduced figure.
The adjustment is not a deduction you elect and not a separate line on the return. It is built into Schedule SE. Net earnings below $400 produce no self-employment tax at all.
What the two rates actually cost
| Net self-employment earnings | 92.35% base | Social Security 12.4% | Medicare 2.9% | Total | Deductible half |
|---|---|---|---|---|---|
| $50,000 | $46,175 | $5,725.70 | $1,339.08 | $7,064.78 | $3,532.39 |
| $100,000 | $92,350 | $11,451.40 | $2,678.15 | $14,129.55 | $7,064.78 |
| $150,000 | $138,525 | $17,177.10 | $4,017.23 | $21,194.32 | $10,597.16 |
| $208,230 | $192,300 | $23,845.20 | $5,576.71 | $29,421.91 | $14,710.96 |
| $300,000 | $277,050 | $23,845.20 | $8,034.45 | $31,879.65 | $15,939.83 |
Excludes the 0.9% additional Medicare tax, which applies to the 92.35% base above $200,000 single or $250,000 joint. That surtax is included in the calculator above and is not deductible.
The cap in practice
At net earnings of $100,000, the 12.4% Social Security part costs $11,451.40 and the 2.9% Medicare part costs $2,678.15. At $300,000, the Social Security part is still $23,845.20 — it has not moved since the base was reached — while the Medicare part has grown to $8,034.45. That divergence is the whole distinction between the two taxes.
If you also have a W-2 job, the wage base is shared. Your employer's payroll already applies the $192,300 cap to your wages, and Schedule SE reduces the self-employment Social Security base by the amount of wages that were subject to Social Security tax. Without that coordination, a person with two income sources would pay past the cap twice.
Half is deductible — and it is not a credit
You may deduct half of the combined 15.3% from gross income. On $100,000 of net earnings, the tax is $14,129.55 and the deduction is $7,064.78. That deduction reduces the income on which income tax is calculated; it does not reduce the self-employment tax by a dollar-for-dollar amount. The 0.9% additional Medicare tax is excluded from the deductible half.
Quarterly estimates
Nobody withholds from self-employment income, so the tax is collected through estimated payments. The payments are due April 15, June 15, September 15, and January 15 of the following year. If you expect to owe less than $1,000 after withholding, the underpayment penalty generally does not apply.
Two safe harbors avoid the penalty regardless of what you ultimately owe: paying at least 90% of the current year's tax, or 100% of the prior year's tax (110% if prior-year AGI exceeded $150,000). Paying the prior year's amount in four equal installments is the simplest way to stay inside the second harbor.
Questions
What is the self-employment tax rate for 2027?
15.3% in total: 12.4% for Social Security and 2.9% for Medicare. It is charged on 92.35% of net self-employment earnings, not on gross receipts and not on the full net profit.
Do I pay the 12.4% on all of my net earnings?
No. The Social Security part stops once the 92.35% base reaches $192,300, which happens at about $208,230 of net earnings. The 2.9% Medicare part has no cap and applies at every income level.
How do I pay self-employment tax?
You report it on Schedule SE with your Form 1040. If you expect to owe $1,000 or more for the year, you are expected to make quarterly estimated payments rather than paying the whole balance in April.
Is the self-employment tax deductible?
Half of the combined Social Security and Medicare tax is deductible from gross income on your federal return. It is an adjustment to income, not a credit, so it reduces taxable income rather than the tax itself.