How SE Tax Is Calculated
Self-employment tax replaces the FICA taxes an employer would normally split with you. First, your net self-employment income is multiplied by 92.35% — this adjustment exists because employees don't pay FICA on the employer's matching half, so self-employed people get a rough equivalent built into the formula. That adjusted amount is then taxed at 12.4% for Social Security (up to an annual wage base cap) and 2.9% for Medicare (with no cap). If you also had W-2 wages this year, those wages are counted first against the Social Security wage base — this calculator accounts for that when you fill in the "Other W-2 Wages" field.
Key Components
92.35% Adjustment
Only 92.35% of your net self-employment income is subject to SE tax, roughly mirroring the employer-side FICA deduction employees benefit from indirectly.
Social Security Wage Base
The 12.4% Social Security portion only applies up to an annual cap. Income above the cap (from all sources combined, including W-2 wages) isn't subject to the Social Security portion.
Medicare Has No Cap
Unlike Social Security, the 2.9% Medicare portion applies to all of your taxable SE income, no matter how high your earnings.
Half Is Deductible
You can deduct half of your SE tax as an adjustment to income on your federal return — this doesn't reduce your SE tax itself, but lowers your income tax bill.
Worked Examples
These use the exact formula above so you can follow the math by hand or check the calculator against your own numbers.
Example 1 — $50,000 net profit, no W-2 wages
Taxable SE income: $50,000 × 92.35% = $46,175.
Social Security: $46,175 × 12.4% = $5,726.
Medicare: $46,175 × 2.9% = $1,339.
Total SE tax: $7,065 (deductible half: $3,532).
Example 2 — $220,000 net profit, no W-2 wages
Taxable SE income: $220,000 × 92.35% = $203,170. This exceeds the $184,500 wage base, so Social Security applies only up to the cap.
Social Security: $184,500 × 12.4% = $22,878.
Medicare: $203,170 × 2.9% = $5,892 (no cap).
Total SE tax: $28,770 (deductible half: $14,385).
Example 3 — $60,000 net profit + $150,000 in W-2 wages
Taxable SE income: $60,000 × 92.35% = $55,410. Remaining Social Security wage base after $150,000 in W-2 wages: $184,500 − $150,000 = $34,500.
Social Security: min($55,410, $34,500) × 12.4% = $4,278.
Medicare: $55,410 × 2.9% = $1,607 (no cap, W-2 wages don't reduce this).
Total SE tax: $5,885 (deductible half: $2,942) — noticeably less than Example 1 despite similar net profit, because the W-2 wages already used up most of the Social Security wage base.
Frequently Asked Questions
Does this calculator include state income tax?
No. This is a federal-only calculator. State income tax rules vary by state and aren't included.
What if my net income is under $400?
Per IRS Topic No. 554, you generally don't owe SE tax if net self-employment earnings are below $400 for the year.
Does 92.35% change every year?
No — it's a fixed statutory percentage. What changes periodically is the Social Security wage base cap.
Where can I verify these formulas?
See IRS Topic No. 554 and the SSA wage base page linked below in Sources.
Related Tools & Guides
Quarterly Estimated Tax Calculator · Additional Medicare Tax Calculator · Deduction & QBI Savings Calculator · How Self-Employment Tax Actually Works (guide) · Full FAQ
Sources: IRS Topic No. 554 — Self-Employment Tax · SSA — Maximum Taxable Earnings for Social Security. This tool provides estimates only — see our Disclaimer.