Common questions about self-employment tax and quarterly estimated payments.
What is self-employment tax and how is it calculated?
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Self-employment tax (SE tax) is 15.3% on your net self-employment earnings. It covers Social Security (12.4%) and Medicare (2.9%). The IRS requires you to multiply your net earnings by 92.35% first — this accounts for the fact that employees only pay half of FICA. So: SE Tax = net earnings × 0.9235 × 15.3%. In 2026, Social Security tax only applies to the first $184,500 of net earnings. Medicare has no cap.
What is the Social Security wage base for 2026?
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The Social Security wage base for 2026 is $184,500 — up from $176,100 in 2025 (a $8,400 increase). This means Social Security tax (12.4%) only applies to net self-employment earnings up to $184,500. Earnings above that are still subject to Medicare tax (2.9%) but not Social Security tax. The maximum Social Security tax for a self-employed person in 2026 is $22,878 ($184,500 × 12.4%).
What is the deductible half of SE tax?
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The IRS allows self-employed individuals to deduct 50% of their SE tax from gross income when calculating federal income tax. This above-the-line deduction reduces your AGI, which lowers your income tax. You claim it on Schedule 1, Line 15. You don't need to itemize — it reduces income before the standard deduction is applied.
When are quarterly estimated payments due in 2026?
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2026 quarterly estimated tax payment due dates: Q1 — April 15, 2026; Q2 — June 15, 2026; Q3 — September 15, 2026; Q4 — January 15, 2027. Note that Q2 covers only April 1 – May 31, while Q3 covers June 1 – August 31 and Q4 covers September 1 – December 31.
What are the 2026 federal income tax brackets?
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2026 single filer brackets: 10% up to $12,400 | 12% $12,401–$50,400 | 22% $50,401–$105,700 | 24% $105,701–$201,775 | 32% $201,776–$256,225 | 35% $256,226–$640,600 | 37% above $640,600. Married filing jointly brackets are roughly double at each threshold. Standard deduction is $16,100 (single) or $32,200 (MFJ).
How do I avoid the underpayment penalty?
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Use the safe harbor rule: pay at least 100% of last year's total tax liability across four equal quarterly payments (110% if your prior-year AGI exceeded $150,000). Meeting this threshold avoids underpayment penalties even if you owe more at filing. Alternatively, pay at least 90% of your current year's actual liability.
Can business expenses reduce my SE tax?
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Yes. Business expenses directly reduce your net self-employment income, which reduces your SE tax base. Every dollar of deductible expense saves you 15.3% in SE tax plus your marginal income tax rate. Common deductions: home office, internet & phone (business portion), software and SaaS tools, equipment, vehicle mileage ($.70/mile standard rate), health insurance premiums, retirement contributions (SEP-IRA up to ~25% of net earnings, Solo 401k up to $70,000), and professional development.
Which states have no income tax?
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Nine states have no individual income tax on wages or self-employment income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire taxes only interest and dividend income (and is phasing that out). If you live in one of these states, your state tax bill is $0 — select "No state income tax" in the calculator.
What's the Additional Medicare Tax (0.9%)?
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The Additional Medicare Tax is 0.9% on net self-employment earnings above $200,000 (single filers) or $250,000 (married filing jointly). It was established by the Affordable Care Act and is unchanged in 2026. Unlike regular Medicare, there's no employer match — self-employed individuals pay the full 0.9%. This calculator automatically adds it when your income exceeds the threshold.
What does "net self-employment income" mean?
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"Net self-employment income" is your gross freelance/contractor revenue minus allowable business expenses (reported on Schedule C). It's not the same as cash in the bank — you subtract things like home office, equipment, software, mileage, and professional fees before arriving at this figure. Enter your expected net SE income (after expenses) in the calculator's income field, or enter gross income and put expenses in the business expenses field to let the tool calculate net for you.