Updated July 2, 2026
Working for yourself means the tax responsibilities your employer used to handle are now yours. This guide covers self-employment tax: what it is, how it is calculated, and how to manage it. General information only, not tax advice.
What is self-employment tax?
Self-employment tax is 15.3% of net earnings in 2026: 12.4% for Social Security up to the $184,500 wage base, plus 2.9% for Medicare with no cap, per IRS Schedule SE. It covers the same Social Security and Medicare programs (FICA) that employees split with their employer; the self-employed pay both halves. The Self-Employment Tax Calculator estimates what you owe.
It's on top of income tax
SE tax is separate from federal income tax. Both apply. A 1099 contractor with no withholding needs to plan for the combined total, which trips up a lot of first-year freelancers who only budget for income tax. The 1099 Tax Calculator estimates the full amount so you can set the right amount aside.
Quarterly estimated payments
Without an employer to withhold on your behalf, the IRS expects quarterly estimated payments. Underpaying brings a penalty, calculated per day. The Quarterly Tax Calculator figures out what to send each period. Setting aside 25 to 30 percent of net income as it comes in is the standard approach.
The S-corp question
At higher income levels, electing S-corp status can cut SE tax by splitting income: a reasonable salary (subject to payroll tax) and distributions (not subject to SE tax). The election adds payroll administration and compliance costs, so there is a break-even income point below which the math does not work. The S-Corp Savings Calculator models the potential savings for your numbers.
Staying organized
Track income and deductible expenses as you go, set aside tax money when payments arrive, and pay quarterlies on time. Deductions available to the self-employed, including home office, mileage, and retirement contributions, can reduce the bill noticeably. They require documentation. Revisit your entity structure as income grows, and check the specifics with a tax professional.
All calculators on this site
- Self-Employment Tax Calculator: your SE tax (Social Security + Medicare) and the deductible half.
- 1099 Tax Calculator: total tax on 1099 income, SE tax plus federal income tax.
- Quarterly Tax Calculator: your four estimated quarterly payments.
- S-Corp Savings Calculator: how much an S-corp election could save you.
Self-employment tax FAQs without the fluff
What is self-employment tax?
Social Security and Medicare tax combined, at 15.3% of net earnings. Employees split this with their employer. The self-employed pay the full amount.
Is it separate from income tax?
Yes. SE tax and income tax are separate obligations. Many first-year freelancers discover this later than they would have liked.
Do I have to pay quarterly?
Generally yes. The IRS expects quarterly estimated payments from the self-employed. Underpaying triggers a penalty based on the amount and time owed.
When does an S-corp help?
At higher income, by dividing pay into a reasonable salary and distributions. Only the salary portion is subject to SE tax. The added compliance costs mean there is a break-even point, typically around $40,000 to $60,000 in net profit depending on the state.
Is this tax advice?
No. The calculators and guides here are for planning and estimation only. Tax advice requires a licensed professional who knows your full situation.