Updated October 29, 2026. Quick answer: Worksheet 2-3 in Publication 505 (2026) estimates your self-employment tax and the deduction for half of it. It takes 92.35% of net profit, applies 2.9% to all of it and 12.4% to the part under the $184,500 social security base after your wages, then halves the total for the deduction. Line 10 feeds the estimated tax worksheet and line 11 reduces adjusted gross income.
What this worksheet is for
Chapter 2 of the publication lists this worksheet as the way “to estimate your self-employment (SE) tax and your deduction for SE tax”. Form 1040-ES (2026) sets the base used on line 5: “For 2026, the maximum amount of earned income (wages and net earnings from self-employment) subject to the social security tax is $184,500.” The 2025 return version of the arithmetic is on the Schedule SE lines 5 to 13 page.
The eleven lines
| Line | What it asks |
|---|---|
| 1a | “Enter your expected income and profits subject to self-employment tax”, with a note that net profit is found on Schedule C, Schedule F and Schedule K-1 (Form 1065). |
| 1b | Farm income only: “enter your expected Conservation Reserve Program payments that will be included on Schedule F (Form 1040) or listed on Schedule K-1 (Form 1065)” |
| 2 | “Subtract line 1b from line 1a” |
| 3 | “Multiply line 2 by 92.35% (0.9235). If less than $400, don’t complete this worksheet; you won’t owe self-employment tax on your expected net earnings from self-employment” |
| 4 | “Multiply line 3 by 2.9% (0.029)” |
| 5 | “Maximum income subject to social security tax”, printed as $184,500 |
| 6 | “Enter your expected wages (if subject to social security tax or the 6.2% portion of tier 1 railroad retirement tax)” |
| 7 | “Subtract line 6 from line 5”. The worksheet adds “If line 7 is zero or less, enter -0- on line 9 and skip to line 10.” |
| 8 | “Enter the smaller of line 3 or line 7” |
| 9 | “Multiply line 8 by 12.4% (0.124)” |
| 10 | “Add line 4 and line 9.” The result goes on line 9 of the estimated tax worksheet. |
| 11 | “Multiply line 10 by 50% (0.50). This is your expected deduction for self-employment tax on Schedule 1 (Form 1040), line 15.” |
Where the 2.9% and the 12.4% come from
The two rates are the Medicare part and the social security part of self-employment tax. Form 1040-ES (2026) gives the same 92.35% starting point in its own self-employment tax worksheet: “be sure to use only 92.35% (0.9235) of your total net profit”. Line 11 explains where the deduction goes. It is subtracted when you figure adjusted gross income on line 1 of the estimated tax worksheet, which is why Worksheet 1-3 and the standard deduction worksheet both refer back to it.
Two examples with invented numbers
Illustration, not an IRS example. A self-employed filer with no wages expects an $80,000 net profit.
| Line | Entry | Amount |
|---|---|---|
| 1a | Expected net profit subject to self-employment tax (invented) | $80,000 |
| 2 | Line 1a minus line 1b, with 1b zero (computed) | $80,000 (computed) |
| 3 | Line 2 times 0.9235 (computed) | $73,880 (computed) |
| 4 | Line 3 times 0.029 (computed) | $2,142.52 (computed) |
| 5 | Maximum income subject to social security tax | $184,500 |
| 6 | Expected wages | $0 |
| 7 | Line 5 minus line 6 (computed) | $184,500 (computed) |
| 8 | Smaller of line 3 and line 7 (computed) | $73,880 (computed) |
| 9 | Line 8 times 0.124 (computed) | $9,161.12 (computed) |
| 10 | Line 4 plus line 9 (computed) | $11,303.64 (computed) |
| 11 | Line 10 times 0.50 (computed) | $5,651.82 (computed) |
Self-employment tax is $11,303.64 and half of it, $5,651.82, is the deduction. Now suppose the same filer also has $170,000 of wages that are subject to social security tax.
| Line | Entry | Amount |
|---|---|---|
| 6 | Expected wages subject to social security tax (invented) | $170,000 |
| 7 | Line 5 minus line 6 (computed) | $14,500 (computed) |
| 8 | Smaller of line 3 (73,880) and line 7 (computed) | $14,500 (computed) |
| 9 | Line 8 times 0.124 (computed) | $1,798 (computed) |
| 10 | Line 4 (2,142.52) plus line 9 (computed) | $3,940.52 (computed) |
| 11 | Line 10 times 0.50 (computed) | $1,970.26 (computed) |
Only $14,500 of the profit is still under the social security base, so line 9 falls to $1,798.00 and the tax to $3,940.52. The 2.9% on line 4 does not stop at the base.
Edition
This page reads Publication 505 (2026), Tax Withholding and Estimated Tax, “For use in 2026”, the file irs.gov served on 2026-10-29 (sha256 in the kit data). Worksheet numbers and line numbers belong to that edition, so check the number printed on the worksheet in your own copy before you follow a line reference. The $184,500 on line 5 is the 2026 maximum quoted above from Form 1040-ES (2026); it changes by year.
Common mistakes
- Applying the rates to net profit instead of 92.35% of it. Line 3 comes before lines 4 and 9.
- Forgetting wages when you also have a job. Line 6 reduces the room under the social security base.
- Skipping line 11. The deduction lowers adjusted gross income on the estimated tax worksheet.
- Completing the worksheet below the floor. If line 3 is under $400 the worksheet says not to complete it.
Related: Schedule 2 line 4 self-employment tax, self-employment tax explained, quarterly estimated taxes for the first year self-employed, and the Form 1040-ES estimated tax worksheet.
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Answer againSources
- Publication 505 (2026), Tax Withholding and Estimated Tax: https://www.irs.gov/pub/irs-pdf/p505.pdf
- 2026 Form 1040-ES, Estimated Tax for Individuals (with instructions): https://www.irs.gov/pub/irs-pdf/f1040es.pdf
Read from the IRS documents linked above on October 29, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.