When you work for an employer, Social Security and Medicare taxes are split: you pay 7.65% and your employer pays 7.65%, for 15.3% total. When you are self-employed, you pay both halves, the full 15.3%, on your net self-employment earnings. This is self-employment tax, figured on Schedule SE.
How it breaks down for 2026
- Social Security: 12.4% on net earnings up to $184,500
- Medicare: 2.9% on all net earnings, no cap
- Additional Medicare tax: 0.9% above $200,000 (single) or $250,000 (married filing jointly)
The deduction that softens the blow
You can deduct half of your self-employment tax (the "employer" half) on your Form 1040. That lowers your adjusted gross income and your income tax, though not the self-employment tax itself.
Tips and overtime
The new deduction for qualified tips (up to $25,000) is available to self-employed people in occupations that customarily receive tips, not just employees. But all self-employment income, including tips, is still subject to self-employment tax. The overtime deduction applies only to employees, not the self-employed.
Watch out: Many first-time freelancers are shocked by their first tax bill because nothing was withheld all year. A single filer with $50,000 of self-employment profit in 2026 owes roughly $9,700 in federal tax (about $7,100 of self-employment tax plus about $2,600 of income tax), plus state tax. Skip the quarterly payments and it is all due at once. See estimated quarterly taxes.
General education only, not advice for your specific situation. Figures checked October 2026. Tax law changes, so confirm current figures at IRS.gov or ask us.