Question 1

How much is self-employment tax?

Accepted Answer

Self-employment tax is 15.3% of net self-employment earnings: 12.4% for Social Security (on earnings up to $184,500 in 2026) and 2.9% for Medicare (on all earnings). An additional 0.9% Medicare surtax applies to earnings above $200,000 for single filers. The tax is calculated on 92.35% of your net self-employment income.

Question 2

Why do self-employed people pay more than employees?

Accepted Answer

Self-employed individuals pay both the employee and employer shares of Social Security and Medicare taxes, totaling 15.3%. W-2 employees only see 7.65% deducted from their paycheck because the employer pays the other 7.65% separately. To partially offset this, the self-employed can deduct half of their SE tax from their adjusted gross income.

Question 3

What is the 92.35% rule for self-employment tax?

Accepted Answer

Before calculating SE tax, you multiply net self-employment earnings by 92.35% (or 0.9235). This adjustment mimics the fact that W-2 employees are not taxed on the employer's share of FICA. On $100,000 of net SE income, the taxable base is $92,350, and the SE tax is approximately $14,130 rather than $15,300.

Question 4

When are quarterly estimated tax payments due?

Accepted Answer

Quarterly estimated tax payments are due April 15, June 15, September 15, and January 15 of the following year. These cover both income tax and self-employment tax. If you fail to pay enough each quarter, the IRS may charge an underpayment penalty. Use Form 1040-ES to calculate and submit quarterly payments.

Question 5

Can I deduct half of my self-employment tax?

Accepted Answer

Yes. You can deduct the employer-equivalent portion (half) of your self-employment tax as an above-the-line adjustment to income on Form 1040, Line 15. This reduces your adjusted gross income and your income tax, but it does not reduce the self-employment tax itself. The deduction is available whether or not you itemize.

Question 6

Do I owe self-employment tax on side hustle income?

Accepted Answer

Yes. If your net self-employment earnings from all sources (freelancing, gig work, side business) exceed $400 in a year, you must pay self-employment tax. This applies even if you also have a W-2 job. Your W-2 wages count toward the Social Security wage cap, which may reduce the Social Security portion of your SE tax.

Question 7

What business expenses can I deduct to lower my SE tax?

Accepted Answer

Ordinary and necessary business expenses reduce your net self-employment income, which directly reduces SE tax. Common deductions include home office expenses, business equipment, software subscriptions, vehicle mileage, health insurance premiums, professional development, and supplies. These are reported on Schedule C and subtracted from gross revenue before SE tax is calculated.

Gross SE Income	$75,000.00
Business Expenses	- $0.00
Net SE Income	$75,000.00
SE Tax Base (92.35% of net)	$69,262.50
Social Security Tax (12.4%)	$8,588.55
Medicare Tax (2.9%)	$2,008.61
Total Self-Employment Tax	$10,597.16
50% SE Tax Deduction	- $5,298.58
Adjusted Gross Income (AGI)	$69,701.42
Standard Deduction	- $16,100.00
Taxable Income	$53,601.42
Federal Income Tax	$6,504.31
Total Tax (Federal + SE)	$17,101.47

Annual Estimated Tax	$17,101.47
Q1 — Due April 15	$4,275.37
Q2 — Due June 15	$4,275.37
Q3 — Due September 15	$4,275.37
Q4 — Due January 15 (next year)	$4,275.37

Self-Employment Tax Calculator

Self-Employment Tax Breakdown

Quarterly Estimated Payment Schedule

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