Note: The calculated tax is an estimate for SE tax (Social Security and Medicare). It does not include income tax.
You can deduct one-half of your self-employment tax when calculating your income tax.
This calculator uses the 2023/2024 tax year rates and thresholds.
Understanding Self Employment Tax
Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.
How is Self Employment Tax Calculated?
The calculation involves several steps, based on your net earnings from self-employment.
Determine Net Earnings: You start with your gross income from self-employment and subtract your deductible business expenses. This results in your net earnings from self-employment.
Calculate Taxable Base: You multiply your net earnings by 92.35% (or 0.9235). This is because only 92.35% of your net earnings are subject to self-employment tax.
Apply Tax Rates:
Social Security Tax: 12.4% on earnings up to the Social Security wage base limit ($168,600 for 2024, $160,200 for 2023).
Medicare Tax: 2.9% on all net earnings.
The combined rate is 15.3% (12.4% + 2.9%).
Calculate Total SE Tax: The initial self-employment tax is 15.3% of the taxable base calculated in step 2, up to the Social Security wage base limit.
Deduct One-Half: You are allowed to deduct one-half of your total self-employment tax from your gross income when calculating your adjusted gross income for income tax purposes. This is a valuable deduction that reduces your overall tax liability.
Example Calculation (Using 2024 figures for illustration):
Let's assume your Net Earnings from Self Employment are $60,000.
1. Taxable Base = Net Earnings * 0.9235
Taxable Base = $60,000 * 0.9235 = $55,410.00
2. SE Tax = Taxable Base * 0.153 (assuming earnings are below the SS wage base limit)
SE Tax = $55,410.00 * 0.153 = $8,477.73
3. Deductible Portion of SE Tax = SE Tax / 2
Deductible Portion = $8,477.73 / 2 = $4,238.87
In this example, your estimated Self Employment Tax would be $8,477.73. You can also deduct approximately $4,238.87 for income tax purposes.
This calculator is for informational purposes only and does not constitute tax advice. Consult with a qualified tax professional for advice specific to your situation. Tax laws and limits are subject to change.
function calculateSelfEmploymentTax() {
var netEarningsInput = document.getElementById("netEarnings");
var selfEmploymentTaxResult = document.getElementById("selfEmploymentTaxResult");
var netEarnings = parseFloat(netEarningsInput.value);
if (isNaN(netEarnings) || netEarnings currentSocialSecurityWageBase) {
// If taxable base exceeds the wage base, only tax up to the wage base for SS
socialSecurityTax = currentSocialSecurityWageBase * 0.124; // 12.4% for SS
// Medicare tax is on the full taxable base (no wage limit for Medicare)
medicareTax = taxableBase * 0.029; // 2.9% for Medicare
} else {
// If taxable base is below the wage base, apply SS rate to the full taxable base
socialSecurityTax = taxableBase * 0.124; // 12.4% for SS
// Medicare tax is on the full taxable base
medicareTax = taxableBase * 0.029; // 2.9% for Medicare
}
totalSETax = socialSecurityTax + medicareTax;
// Ensure the total SE tax doesn't exceed the theoretical maximum if someone had extremely high earnings
// This check is more for robustness, the above logic should handle it with wage base.
// Example: 168600 * 0.153 = 25795.80 (max SE tax for 2024)
var maxSETax = currentSocialSecurityWageBase * seTaxRate;
if (totalSETax > maxSETax) {
totalSETax = maxSETax;
}
// Format the results to two decimal places
var formattedSETax = totalSETax.toFixed(2);
// Display the result
selfEmploymentTaxResult.textContent = "$" + formattedSETax;
}