Self-Employment Tax Calculator
If you drive for a ride-hailing app, work a side gig or otherwise own a small business, you may have to pay self-employment taxes. These are based on your net earnings, which is your income minus qualified business expenses. Enter your income from self-employment and your tax filing status into the calculator above to estimate your tax.
What Is Self-Employment Tax?
The self-employment tax is a tax that small-business owners pay to support the Social Security and Medicare programs. If you’re a sole proprietor, independent contractor or member of a partnership, you’ll pay this on top of your income tax.
Self-employment taxes are similar to FICA taxes, which W-2 workers split with their employers. You’ll be responsible for the entire amount, but you can deduct half the tax on Schedule 1, Line 15 of your federal tax return.
What Is the Tax Rate for Self-Employment?
For 2022, the self-employment tax rate is 15.3% on net earnings. The tax is divided into two parts: 12.4% goes toward Social Security and 2.9% goes to Medicare. The first $147,000 of your total net earnings, wages and tips are subject to Social Security taxes for 2022, while the Medicare tax applies to all of your earnings.
If your income exceeds $200,000 for the year ($250,000 for married couples and $125,000 for those who are married filing separately), you’ll pay an additional 0.9% in Medicare taxes for every dollar that exceeds the threshold.
For example, let’s say you’re a single self-employed taxpayer who earns $325,000 in 2022. That works out to:
- Social Security tax of 12.4% on $147,000
- Medicare tax of 2.9% on $325,000
- Additional Medicare of 0.9% tax on $125,000 (the income amount above the $200,000 threshold)
How Tax Is Calculated for Self-Employment
While you’re required to pay self-employment taxes, the tax bill might be less than you expect. Only 92.35% of your total net earnings are subject to self-employment tax. This is known as your tax base.
For example, let’s say you’re single and your 2022 self-employment net earnings come out to $50,000. Here’s how you’d calculate your self-employment taxes:
- Determine your self-employment tax base. Multiply your net earnings by 92.35% (0.9235) to get your tax base: $50,000 x 92.35% = $46,175
- Calculate your self-employment tax. Multiply your tax base by the self-employed tax rate: $46,175 x 15.3% (0.153) = $7,064.78. There’s no additional Medicare tax because your net earnings fall under $200,000.
You can use Schedule SE to help calculate your self-employment tax. It’s important to complete the form accurately and submit it with your federal income tax return. The Social Security Administration uses information from Schedule SE to determine your benefits. If you’re using some of the best tax software for the self-employed, it will fill out the form for you.
Once you determine your self-employment tax, you can claim a self-employment tax deduction equal to 50% of your total self-employment tax.
Who Has To Pay Self-Employment Tax?
If your net earnings exceed $400 from self-employment income, you’re required to pay self-employment tax. Church employees must pay self-employment taxes if their income is more than $108.28. If you earn less than these thresholds, you’re generally not required to pay self-employment taxes.
There are other circumstances where you may have to pay self-employment taxes, so it’s important to speak with a tax professional or review the self-employment tax rules before filing your tax return.
