# Self-Employment Tax

> The 15.3% Social Security + Medicare tax self-employed people pay in lieu of FICA withholding. Half is deductible above the line.

Category: self-employment-and-taxes
Updated: 2026-05-26
Canonical: https://everylastmile.app/glossary/self-employment-tax

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**Self-employment (SE) tax** is the 15.3% Social Security and Medicare tax that self-employed people pay on their net earnings under **IRC §1401**. It is the self-employed equivalent of the FICA tax that a W-2 employer would otherwise split with the employee.

**The mechanics.**

1. Take net profit from Schedule C.
2. Multiply by **92.35%** (this 7.65% haircut is the technical reflection of the employer-share deduction in IRC §1402(a)(12)).
3. On that base:
   - **12.4% Social Security**, up to the 2026 wage base of **$184,500** (SSA, October 24, 2025 announcement) — capping the SS portion at $22,878.
   - **2.9% Medicare**, with no cap.
   - **0.9% Additional Medicare Tax** under IRC §1401(b)(2) on net SE earnings above $200,000 (single) or $250,000 (married filing jointly), reported on Form 8959.

**The above-the-line deduction.** IRC §164(f) lets you deduct half of your SE tax on Schedule 1 to arrive at AGI. This is not the SE tax itself going away — it's the income-tax acknowledgment that you paid the employer's half too.

**Worked example.** Andre nets $30,000 on Schedule C in 2026.

- Step 1: $30,000 × 0.9235 = $27,705 (SE base)
- Step 2: $27,705 × 0.153 = **$4,239** SE tax
- Step 3: $4,239 / 2 = $2,120 deductible above the line on Schedule 1, line 15

Andre's income-tax calculation begins from $30,000 net profit minus $2,120, or $27,880 — _before_ applying his QBI deduction and standard deduction. The full $4,239 is owed regardless of his income tax bracket; even a freelancer in the 0% income-tax zone owes SE tax.

**Why this hurts gig workers most.** A W-2 employee earning $30,000 pays 7.65% in FICA ($2,295). A self-employed person earning $30,000 owes nearly **twice** that. This is why the mileage deduction is so valuable to gig drivers — every $1 of mileage deduction reduces both income tax _and_ SE tax.