Updated August 7, 2026. Quick answer: self-employment tax is 15.3%, and the IRS is explicit about what it is made of: “The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).” It is not instead of income tax — it is on top of it. You are paying both halves because you are both the employer and the employee, and you get to deduct the employer half in figuring your adjusted gross income. The 12.4% Social Security portion stops at the annual wage base; the 2.9% Medicare portion does not stop.
On deductions by profession: tax deductions for hair stylists and tax deductions for notaries and signing agents.
On deductions by profession: tax deductions for insurance agents.
Federal income tax on 2026 wages, worked out for single and joint filers: federal income tax on $125,000 in 2026, federal income tax on $150,000 in 2026 and federal income tax on $750,000 in 2026.
For what changed on the 2026 draft of the schedule, see Schedule SE 2026 changes.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for jewelry makers and sellers, Schedule C code for land surveyors and Schedule C code for masons and concrete contractors.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for chiropractors, Schedule C code for physical therapists and Schedule C code for mental health counselors.
More on the 2026 tax figures: the 2026 self-employment tax rates and base.
Publication 505 worksheets for 2026: Estimated Self-Employment Tax Worksheet 2-3.
More on the 2027 tax figures: the 2027 self-employment tax rates and base.
IRS worksheets read line by line: Qualified Overtime Compensation From More Than One Payor Worksheet.
IRS worksheets read line by line: Clergy housing allowance worksheets.
Pennsylvania Form PA-40, line by line: Pennsylvania Form PA-40 line 4.
Related reading on this site: IRS Tax Topic 762.
Related reading on this site: IRS Tax Topic 554.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for IT consultants, Schedule C code for personal trainers and Schedule C code for insurance agents.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for consultants, Schedule C code for rideshare and delivery drivers and Schedule C code for freelance writers and artists.
More IRS forms for employers and business owners, read line by line: Form 944 instructions.
More IRS forms and schedules, read line by line: Form 8919 uncollected social security tax.
Form lines read one part at a time: Form 8959 Part II.
IRS worksheets read line by line: EIC Worksheet B.
Schedule C and Schedule SE (Form 1040) for 2025, read line by line: Schedule C lines 2 to 5, Schedule C lines 17 to 19 and Schedule C lines 20 to 22.
Related reading on this site: Form 8959 Additional Medicare Tax.
Schedule 2 (Form 1040) for 2025, read line by line: Schedule 2 line 4, Schedule 2 line 9 and Schedule 2 lines 19 to 21.
Schedule 1 (Form 1040) for 2025, read line by line: Schedule 1 lines 15 and 16, Schedule 1 line 17 and Schedule 1 lines 25 and 26.
Form 1040 for 2025, lines 12 to 38 read line by line: Form 1040 line 13, Form 1040 line 27 and Form 1040 line 38.
Form 1040 for 2025, read line by line: Form 1040 line 1b, Form 1040 line 1c and Form 1040 line 1g.
Related reading on this site: Form 1040 due date 2027, Form 1065 and 1120-S due date 2027 and Estimated tax due dates 2027.
The employee copy of Form W-2, read box by box: W-2 box 13 statutory employee.
The employee copy of Form W-2, read box by box: W-2 box 4, W-2 box 6 and W-2 box 7.
The recipient copy of Form 1099-G or 1099-K, read box by box: 1099-G and 1099-K boxes explained, 1099-K boxes 1c and 1d and 1099-K box 4 and boxes 5a to 5l.
More IRS forms and schedules, read line by line: Form W-4 instructions and Form 941 instructions.
The recipient copy of Form 1099-NEC or 1099-MISC, read box by box: 1099-NEC and 1099-MISC boxes explained, 1099-NEC box 1a and 1099-NEC boxes 1b to 1d.
More IRS forms and schedules, read line by line: Form 1065 instructions, Form 1120-S instructions and Form 3115 instructions.
More IRS forms and schedules, read line by line: Schedule 2 instructions, Form 8300 instructions and Form 2553 instructions.
More IRS forms and schedules, read line by line: Schedule C instructions and Form 8829 instructions.
More IRS forms and schedules, read line by line: Form 1099-MISC instructions and Form 2210 instructions.
Where a partner finds self-employment earnings: Schedule K-1 (Form 1065) Boxes and Codes Explained.
Why it feels like a surprise
In a job, 7.65% came out of your pay and your employer paid a matching 7.65% you never saw on a payslip. Self-employed, the two halves are visibly yours. Nothing has been added; what changed is that the invisible half became visible. That is genuinely most of the shock, and it is worth naming, because the common reaction — that self-employment is punitively taxed — is not quite right.
The offset the IRS provides: “You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income.” It is an above-the-line deduction, so you get it whether or not you itemise.
The ceiling, and the part with no ceiling
The 12.4% Social Security component applies only up to the annual wage base — $184,500 for 2026, set by the Social Security Administration in its annual cost-of-living determination. Above that, the Social Security piece stops entirely and only the 2.9% Medicare piece continues, which is why the effective rate on self-employment income falls sharply once you cross it.
Running the other way, an additional Medicare tax applies at higher incomes. The 2025 Schedule SE instructions state it as “A 0.9% Additional Medicare Tax” applying above “Married filing jointly—$250,000; Married filing separately—$125,000; Single, Head of household, or Qualifying surviving spouse—$200,000.” Those thresholds are quoted from the 2025 instructions because that is the most recent revision published, and they are not inflation-indexed.
The question an encore business actually asks
Not “what is the rate” but “what does this income do to my Social Security?” Two different things, constantly confused:
- Before full retirement age, self-employment earnings can cause benefits to be withheld under the earnings test — and the withheld months are not lost, which is the fact that changes the decision. The calculator sizes it.
- At any age, self-employment earnings are covered earnings, so they enter your benefit computation and can raise the benefit itself if they displace a low year.
Those two pages own that story. What belongs here is the connection people miss: the 12.4% you are paying is what makes the earnings count toward the benefit at all. The tax and the credit are the same transaction — which is why an S-corp election moves both at once, taking the distribution out of the earnings test and out of the benefit formula together. The three systems an encore business runs into covers the rest, including the Medicare premium consequence two years later.
And it buys something else
Self-employment income is earned income, and earned income unlocks retirement accounts that pension and portfolio income cannot: what a small amount of side income actually lets you contribute to. For many encore businesses that is worth more than the deductions are.
Sources and limits
Rate, components and the employer-equivalent deduction quoted 2026-08-07 from the IRS’s Self-employment tax page; the Additional Medicare Tax thresholds from the Instructions for Schedule SE (tax year 2025). The $184,500 wage base is the SSA’s 2026 contribution and benefit base from its annual determination published 3 November 2025; irs.gov’s own current Schedule SE instructions still state the 2025 figure of $176,100, so check the year on any wage base you see quoted, including this one. General information, not tax advice.
If the self-employment income in question is consulting work after a career, the transition has its own page: the three changes that arrive at once.
All the numbers, kept current. This page uses 3 figures from our claims register — every figure we track is on one page, each with the year it applies to and a plain statement of what makes it move.