Self-employed2 min read · Updated October 19, 2026
Self-employment tax explained: what you owe and what to set aside
How self-employment tax works, the 92.35% rule, how it adds to income tax, and a worked example on $80,000 of profit.
How it is worked out
Multiply net profit by 92.35%. Take 12.4% of that for Social Security, up to the wage limit, and 2.9% for Medicare. You then deduct half of the tax from your income before income tax.
Worked example
| Net profit | $80,000 |
| Self-employment tax | $11,304 |
| Federal income tax (single, 2026) | $7,527 |
| Set aside | $18,830 |
| Per quarter | $4,708 |
What is not included
State tax, the qualified business income deduction, retirement contributions and credits all change the real bill. This is a planning estimate.
Common questions
What is the self-employment tax rate?
15.3%, applied to 92.35% of net profit.
Can I deduct part of it?
Yes, half of the self-employment tax is deductible.