Is self-employment tax the same as income tax?
No. Self-employment tax funds Social Security and Medicare. Federal income tax is calculated separately using taxable income, filing status, deductions, and tax brackets.
Social Security + Medicare | 2025 and 2026
Self-employment tax calculator
Calculate the Social Security and Medicare tax on net business profit, then see the separate federal income tax estimate and take-home amount. W-2 wages are included when measuring the annual Social Security cap.
Business income
Use annual US dollar amounts.
Estimated self-employment tax2026 planning estimate
$0Combined 12.4% Social Security and 2.9% Medicare portions before any Additional Medicare Tax.
Social Security portion$0Limited by the annual wage base
Medicare portion$0No annual wage cap
Deductible half of SE tax$0Adjustment used in the income-tax estimate
Net earnings subject to SE tax$0Profit is adjusted to 92.35% in the tax engine
| Net business profit | $0 |
|---|---|
| Self-employment tax | $0 |
| Additional Medicare tax from 1099 income | $0 |
| Federal income tax added by 1099 profit | $0 |
| Optional state/local estimate | $0 |
| Total estimated 1099 tax | $0 |
| Estimated 1099 take-home | $0 |
Income is above the simplified QBI threshold. Business type, wage, property, and phase-in limits can change the result.
The state estimate is a user-selected planning rate, not a state tax return calculation.
Federal formula
Why 15.3% is not simply multiplied by gross income
Self-employment tax starts with net profit after ordinary business expenses. In the common Schedule SE method, 92.35% of that profit becomes net earnings for this tax. Social Security applies only up to the annual wage base after applicable W-2 wages; Medicare has no comparable wage cap.
Net earnings for SE tax = (gross business income - business expenses) x 92.35%- Combined rate12.4% Social Security plus 2.9% Medicare.
- 2026 wage base$184,500 for the Social Security portion, according to the Social Security Administration.
- IRS guidanceIRS Topic 554 explains the 92.35% net-earnings adjustment and $400 filing threshold.
Questions
Self-employment tax FAQ
Self-employment tax and income tax are separate calculations. Business deductions may reduce both, while the standard deduction generally affects income tax but not net earnings for self-employment tax.
Do business expenses reduce self-employment tax?
Ordinary and necessary business expenses generally reduce Schedule C net profit, which can reduce net earnings subject to self-employment tax. Deductibility depends on the facts and current law.
Why enter W-2 wages?
W-2 wages and self-employment net earnings share the same annual Social Security wage base. Medicare tax has no wage base, and higher combined earnings can also trigger Additional Medicare Tax.