Self-Employment Tax Explained: The 15.3% on 1099 Income
Self-employment tax is 15.3% on 92.35% of your net 1099 profit — 12.4% Social Security up to $184,500 and 2.9% Medicare. How it works, the deductible half, and a free calculator.
What self-employment tax is
When you work for yourself, you pay both halves of Social Security and Medicare — the part an employer normally covers and the part withheld from a paycheck. Together that is 15.3%: 12.4% for Social Security and 2.9% for Medicare. It is separate from, and on top of, income tax. The Self-Employment Tax calculator works it out from your net profit.
The 92.35% rule and the deductible half
Self-employment tax is charged on 92.35% of your net profit, not the whole figure — you subtract the employer-equivalent half before the tax is calculated. On $80,000 of net profit, the taxable base is $73,880 and the tax is about $11,304. You then deduct half of that — about $5,652 — as an adjustment to income on your Form 1040, which lowers your income tax. Social Security stops at the 2026 wage base of $184,500; Medicare keeps applying to every dollar.
It is separate from income tax
Self-employment tax is not your whole tax bill. As a 1099 worker you usually owe federal and state income tax too, and you typically pay everything together through quarterly estimated taxes rather than payroll withholding. Setting aside roughly 25–30% of profit is a common rule of thumb, though your real rate depends on income and deductions like the qualified business income (QBI) deduction.
1099 vs W-2
The self-employment tax is the main reason 1099 income is not directly comparable to a W-2 salary — an employee splits FICA with their employer, while a contractor carries all of it. If you are weighing contract work against a job, the Contractor vs Employee Cost calculator shows the fully loaded picture, and the Paycheck calculator estimates W-2 take-home. Not sure which you are? See the classification test.
Frequently asked questions
It is 15.3% — 12.4% Social Security plus 2.9% Medicare — charged on 92.35% of your net profit. Social Security stops at the $184,500 wage base for 2026; Medicare has no cap.
You subtract the employer-equivalent half of the tax first, which works out to multiplying net profit by 0.9235. It mirrors the part an employer would otherwise cover.
Yes. You deduct half of it as an above-the-line adjustment to income on Form 1040. It lowers your income tax, though not the self-employment tax itself.
No. It is separate from federal and state income tax. Most 1099 workers owe both and pay them together through quarterly estimated taxes.