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Only 92.35% of your net self-employment business profit is subject to the SE tax, which mirrors the FICA deduction for W-2 employees.
SE Net Earnings = Net Business Profit × 92.35%The standard SE tax rate is 15.3% (12.4% for Social Security up to the wage limit, and 2.9% for Medicare on all SE earnings).
SE Tax = (SE Net Earnings up to cap × 12.4%) + (SE Net Earnings × 2.9%)The IRS allows you to deduct 50% of your SE tax from your adjusted gross income (AGI) on your Form 1040.
SE Tax Deduction = SE Tax × 50%Updated: July 2026
A freelance writer earning $45,000 in net profit after business expenses.
→ Taxable SE earnings: $41,558; SE tax: ~$6,358; AGI deduction: ~$3,179
An IT consultant earning $120,000 net profits, which is within the Social Security taxable wage limit ($168,600 in 2024).
→ Taxable SE earnings: $110,820; SE tax: ~$16,955; AGI deduction: ~$8,478
A business owner earning $200,000 net profit, where earnings exceed the Social Security cap, exempting excess earnings from the 12.4% rate.
→ Social Security tax capped; Medicare tax on entire balance; Total SE tax: ~$26,200
Self-employed individuals must pay both the employer and employee portions of Social Security and Medicare taxes (Self-Employment Tax). This calculator estimates your SE tax liability and the corresponding income tax deduction based on your net earnings.