Question 1

What is the self-employment tax rate?

Accepted Answer

The self-employment tax rate is 15.3%, made up of 12.4% for Social Security (on net earnings up to the annual wage base) and 2.9% for Medicare (on all net earnings). Self-employed people pay both the employer and employee halves.

Question 2

What is the Social Security wage base for 2025?

Accepted Answer

For 2025 the Social Security wage base is $176,100 (it was $168,600 in 2024 and rises to $177,000 for 2026). Earnings above this amount are no longer subject to the 12.4% Social Security portion, but the 2.9% Medicare still applies.

Question 3

How is net earnings from self-employment calculated?

Accepted Answer

Multiply your Schedule C net profit by 92.35% (0.9235). This factor removes the employer-equivalent half of SE tax. Only net earnings above $400 trigger the SE tax filing requirement.

Question 4

Can I deduct part of my self-employment tax?

Accepted Answer

Yes. You can deduct 50% of your self-employment tax (the employer-equivalent portion) as an above-the-line adjustment to income on Schedule 1, which lowers both your income tax and adjusted gross income.