How Self-Employment Tax Works
Self-employed individuals (freelancers, sole proprietors, independent contractors, and single-member LLC owners) pay both the employee and employer portions of FICA taxes:
- Social Security: 12.4% on net earnings up to the annual limit ($176,100 for 2026).
- Medicare: 2.9% on all net earnings with no income cap, plus 0.9% Additional Medicare tax for high earners.
Under IRS rules, you only pay SE tax on 92.35% of your net business profit, and you can deduct half of your total SE tax (50%) on Form 1040 as an above-the-line deduction to lower your federal income tax.
Frequently Asked Questions
When are quarterly estimated taxes due?
Quarterly estimated taxes are typically due on April 15 (Q1), June 15 (Q2), September 15 (Q3), and January 15 of the following year (Q4).