In short
Self-employment tax is 15.3% (12.4% Social Security up to $184,500 plus 2.9% Medicare) on 92.35% of net profit, and half of it is deductible. On $90,000 of profit a single filer owes $12,717 of SE tax plus $6,599 of income tax after the standard and QBI deductions — $19,316, or 21.5%. Pay it in four estimated installments due 15 April, 15 June, 15 September and 15 January, covering 90% of this year's tax or 100% of last year's (110% above $150,000 AGI).
When you work for yourself nobody withholds tax from a paycheck or pays half of your Social Security and Medicare. This guide explains how the 15.3% self-employment tax is calculated for 2026, why only 92.35% of profit is taxed and half the tax is deductible, how the 20% qualified business income (QBI) deduction cuts income tax, and how to size quarterly payments so you never owe a penalty. By the end you will be able to turn a net-profit figure into a monthly set-aside.
Open the self-employment tax calculator →
What self-employment tax is
Employees and employers each pay 6.2% Social Security and 1.45% Medicare on wages — 7.65% each, 15.3% in total. A sole proprietor, freelancer, gig worker or single-member LLC owner is both employer and employee, so they pay the full 15.3%: 12.4% Social Security plus 2.9% Medicare. It is reported on Schedule SE, applies once net earnings reach $400 for the year, and is charged on top of ordinary income tax.
| Component | Rate | Applies to (2026) |
|---|---|---|
| Social Security | 12.4% | Net earnings up to $184,500 (less any W-2 wages already subject to Social Security) |
| Medicare | 2.9% | All net earnings, no cap |
| Additional Medicare | 0.9% | Earnings above $200,000 (single, head of household), $250,000 (married filing jointly) or $125,000 (married filing separately) |
The $184,500 wage base is the 2026 Social Security contribution and benefit base; the 0.9% thresholds are statutory and not indexed. If you also have a W-2 job, your wages use up the wage base first, so a high salary can eliminate the 12.4% part on your side income, though the 2.9% Medicare always applies.
The 92.35% factor and the half-deduction
Two adjustments keep the self-employed level with an employer-employee pair.
- Net earnings = net profit × 92.35%. An employer’s 7.65% share of FICA is not counted as wages, so Schedule SE removes the equivalent 7.65% from profit before applying 15.3%. In effect the SE tax is 14.13% of profit.
- Half of the SE tax is an above-the-line deduction on Schedule 1, reducing AGI and income tax — not the SE tax itself.
The 20% QBI deduction
Most sole proprietors, partners, S-corporation owners and landlords running a trade or business can deduct 20% of qualified business income, limited to 20% of taxable income (before the deduction) minus net capital gains. For 2026 the full deduction is available up to $201,750 of taxable income ($403,500 married filing jointly). Over the next $75,000 ($150,000 joint) the W-2 wage and property limits phase in and specified service businesses (health, law, consulting, financial services and similar) lose the deduction progressively, with nothing left above $276,750 ($553,500). From 2026 an active business with at least $1,000 of QBI gets a minimum deduction of $400. The QBI deduction reduces income tax only; it has no effect on SE tax. The QBI deduction calculator handles the phase-in and service-business rules.
Worked example: single filer, $90,000 net profit, no W-2 wages
Self-employment tax. Net earnings = $90,000 × 92.35% = $83,115. Social Security = $83,115 × 12.4% = $10,306. Medicare = $83,115 × 2.9% = $2,410. SE tax = $12,717. Deductible half = $6,358.
Income tax. AGI = $90,000 − $6,358 = $83,642. Less the $16,100 standard deduction = $67,542 of taxable income before QBI. The QBI deduction is 20% of the lesser of qualified business income and that figure: 20% × $67,542 = $13,508. Taxable income = $54,033. Using the 2026 single brackets: $12,400 × 10% = $1,240; ($50,400 − $12,400) × 12% = $4,560; ($54,033 − $50,400) × 22% = $799. Income tax = $6,599.
Total federal tax = $12,717 + $6,599 = $19,316, 21.5% of profit — about $1,610 a month or $4,830 a quarter to set aside, before state tax.
Without the QBI deduction, taxable income would be $67,542 and income tax $9,571 — the deduction saves $2,972.
Quarterly estimated payments and the safe harbors
Because nothing is withheld, the IRS expects you to pay as you go. If you expect to owe $1,000 or more after any withholding and credits, you must make estimated payments on Form 1040-ES. The 2026 due dates are:
| Installment | Due | Gap since previous |
|---|---|---|
| 1st | 15 April 2026 | — |
| 2nd | 15 June 2026 | 2 months |
| 3rd | 15 September 2026 | 3 months |
| 4th | 15 January 2027 | 4 months |
Note the unequal gaps: the second installment comes only two months after the first. You avoid an underpayment penalty if your payments through the year equal the smaller of:
- 90% of this year’s tax (the current-year method), or
- 100% of last year’s tax, rising to 110% if last year’s AGI was over $150,000 ($75,000 married filing separately) — the prior-year safe harbor.
Paying the prior-year figure in four equal installments is the simplest penalty-proof route when income is rising: any extra tax is just due with the April return, without penalty. In the example above, the current-year target is 90% × $19,316 = $17,384, or $4,346 a quarter. If last year’s tax was lower, four payments of a quarter of that amount are enough. Withholding from a W-2 job or a spouse’s job counts as paid evenly through the year, so raising withholding on a new W-4 late in the year can cure an underpayment that estimated payments no longer can. The quarterly estimated tax calculator compares both methods, credits withholding and splits the remainder over the quarters left. Penalties are interest-like, computed quarter by quarter on Form 2210; if income arrives unevenly, the annualized method on Schedule AI matches payments to when it was earned.
1099 vs W-2: why a contractor needs a higher rate
A contractor on Form 1099-NEC pays both halves of FICA, buys their own health insurance, gets no retirement match, is unpaid for holidays and sick days, and carries their own equipment and accounting costs. Against that, expenses are deductible, the QBI deduction applies, and SEP or solo 401(k) limits are far higher. Matching a salary typically needs 1.3 to 1.6 times the W-2 hourly rate.
The 1099 vs W-2 calculator solves for the exact figure. For a single filer offered $90,000 plus $12,000 of benefits, with 1,800 billable hours, $15,000 of business costs and 5% state tax, the W-2 package nets $67,645 plus benefits — $79,645 to match. Matching it as a contractor needs about $125,300 of revenue, or $69.59 an hour, 1.61 times the W-2 rate of $43.27. A 1099 offer of $65 an hour would leave that worker about $5,400 a year behind.
Common mistakes
- Applying 15.3% to the full profit. The rate applies to 92.35% of profit, and half the result is deductible — using the headline rate overstates the bill.
- Expecting the QBI deduction to cut SE tax. It only reduces income tax; Schedule SE is computed on profit before it.
- Setting aside only income tax. At $90,000 of profit the SE tax ($12,717) is nearly double the income tax ($6,599). Budget for both — roughly 25–30% of profit at middle incomes, plus state tax.
- Missing the June deadline. The second installment is due two months after the first, not three.
- Ignoring the 110% rule. With prior-year AGI over $150,000, 100% of last year’s tax is not a safe harbor.
- Forgetting that a side business plus a salary still needs Schedule SE. Medicare at 2.9% applies to the side profit however large the salary.
Frequently asked questions
What is the self-employment tax rate for 2026?
15.3% on 92.35% of net profit: 12.4% Social Security up to $184,500 of combined wages and net earnings, plus 2.9% Medicare without limit, plus 0.9% additional Medicare above $200,000 (single) or $250,000 (married filing jointly).
How much tax will I pay on $90,000 of self-employment income?
For a single filer with no other income, about $12,717 of self-employment tax plus $6,599 of federal income tax after the standard and QBI deductions — $19,316 in total, or 21.5% of profit, before state tax.
When are 2026 estimated taxes due?
15 April, 15 June and 15 September 2026, and 15 January 2027. You must pay if you expect to owe $1,000 or more after withholding.
Can I just pay 100% of last year’s tax?
Yes. Paying 100% of last year’s tax (110% if last year’s AGI was over $150,000) in four equal installments avoids a penalty no matter how much more you earn this year; the balance is due with your April return.
Is half of self-employment tax deductible?
Yes. The employer-equivalent half is an adjustment to income on Schedule 1, reducing AGI and income tax. It does not reduce the SE tax itself.
Sources
- SSA — Contribution and benefit base; IRS Topic 751/560 — $184,500 wage base, 12.4%/2.9% rates, 92.35% factor and the half-deduction, checked 8 October 2026.
- IRS Publication 505; Form 1040-ES — $1,000 threshold, 90%/100%/110% safe harbors and 2026 due dates, checked 8 October 2026.
- Rev. Proc. 2025-32; IRC §199A as amended by P.L. 119-21 — QBI thresholds, phase-in ranges and $400 minimum, checked 8 October 2026.
- IRS — Tax year 2026 inflation adjustments (IR-2025-103) — 2026 brackets and standard deduction used in the worked example, checked 8 October 2026.