Self-Employment Tax
The combined Social Security and Medicare tax paid by self-employed individuals at a combined rate of 15.3%.
What is SE Tax?
Self-employment tax is the Social Security (12.4%) and Medicare (2.9%) tax that self-employed individuals, freelancers, and sole proprietors pay in lieu of employer-withheld payroll taxes. The combined rate is 15.3%, applied to the first $168,600 of net self-employment income in 2024 for Social Security, with no wage cap for the 2.9% Medicare portion. High earners also owe the 0.9% Additional Medicare Tax on self-employment income above $200,000 (single). Self-employed taxpayers may deduct half of their SE tax as an above-the-line deduction on Form 1040.
Example
A freelance designer earns $80,000 in net self-employment income in 2024. Their SE tax is 15.3% × 92.35% × $80,000 = $11,304 (the 92.35% multiplier accounts for the deductible employer-equivalent share). They deduct half ($5,652) above the line on Form 1040, reducing their AGI and taxable income.
Source: IRS — Self-Employment Tax (Social Security and Medicare Taxes)