2017 Self-Employment Tax
For 2017, the Self-Employment Tax figures are 15.3% (Rate), 12.4% (Social security rate), 2.9% (Medicare rate) and 2 more figures below.
Effective 2017-01-01Source: Publication 334 (2017), Tax Guide for Small Business (IRS)Verified 2026-09-04
Compared with 2016
| Item | 2016 | 2017 | Change |
|---|---|---|---|
| Rate | 15.3% | 15.3% | +0% (+0.0%) |
| Social security rate | 12.4% | 12.4% | +0% (+0.0%) |
| Medicare rate | 2.9% | 2.9% | +0% (+0.0%) |
| Share of net earnings taxed | 92.35% | 92.35% | +0% (+0.0%) |
| Maximum net earnings subject to the social security part | $118,500 | $127,200 | +$8,700 (+7.3%) |
Who it applies to
Self-employed individuals filing 2017 federal income tax returns
What changed this year, and why
IRS Publication 334 sets the rates and rules for the 2017 Self-Employment Tax. The overall rate is 15.3%, made up of a 12.4% social security portion and a 2.9% Medicare portion. Only 92.35% of net earnings from self-employment is subject to the tax. The social security portion applies to a capped amount of combined wages, tips, and net earnings, while the Medicare portion applies to all net earnings.
Common questions
- What is the self-employment tax and who must pay it?
- For 2017, the self-employment tax rate is 15.3%, consisting of 12.4% for social security and 2.9% for Medicare.
- How are net earnings from self-employment calculated for SE tax?
- Under the regular method, net earnings from self-employment are calculated by multiplying self-employment earnings by 92.35%. That amount is subject to the SE tax.
- Is there a limit on earnings subject to each part of the SE tax?
- The social security portion applies only to a wage base that changes each year; the Medicare portion applies to all net earnings.
The $400 threshold that makes Schedule SE mandatory
If your net earnings from self-employment, excluding any church employee income, were $400 or more during the year, you must pay self-employment tax and file Schedule SE (Form 1040). The $400 figure is the trigger: anyone at or above it is in scope, and anyone below it does not use Schedule SE on this basis. Church employee income is handled under a separate, lower threshold and is excluded when you apply this $400 test to your self-employment earnings. The rule is based on the amount you earn from self-employment work, not on whether you received a Form 1099 or whether a client treated you as an independent contractor. If you had more than one self-employed activity, you combine the net earnings from all of them before comparing to the $400 threshold. Meeting this threshold also means your earnings will be reported to the Social Security Administration and will count toward your future social security and Medicare benefits.
1. Your net earnings from self-employment (excluding church employee income) were $400 or more.
Publication 334 (2017), Tax Guide for Small Business (IRS)
Church employee income is taxed from $108.28
If you work for a church or a church-controlled organization that is exempt from social security and Medicare taxes, you are still subject to self-employment tax on your church employee earnings once they reach a specific dollar amount. That threshold is $108.28, which is much lower than the floor that applies to regular self-employment income. This means church employees can owe SE tax even when their earnings from that work are modest. The $108.28 figure is the line: once your church employee income meets or exceeds it, you must file Schedule SE and pay self-employment tax on those earnings. Church employee income is counted separately from other self-employment earnings for purposes of the higher threshold, so the two rules do not overlap. The tax is calculated at the full 15.3% rate, divided between the 12.4% social security portion and the 2.9% Medicare portion, applied to 92.35% of the earnings after the allowable reduction.
2. You had church employee income of $108.28 or more.
Publication 334 (2017), Tax Guide for Small Business (IRS)
Age and drawing benefits do not exempt you
Self-employment tax applies to you no matter how old you are, and it continues to apply even if you are already collecting social security or Medicare benefits. There is no age-based exemption and no exemption based on your receipt of retirement benefits. If you have net earnings from self-employment that meet the filing threshold, you must file Schedule SE and pay the tax at the full 15.3% rate, which consists of the 12.4% social security portion and the 2.9% Medicare portion. The tax is calculated on 92.35% of your net earnings after the allowable reduction. Some people mistakenly believe that once they start receiving social security retirement benefits they no longer owe self-employment tax on earnings from work they continue to do, but the IRS rule is clear: age and benefit receipt do not remove the obligation. Only if your net earnings fall below the filing threshold will you be free of the requirement for that year.
more. The SE tax rules apply no matter how old you are and even if you are already receiving social secur- ity or Medicare benefits.
Publication 334 (2017), Tax Guide for Small Business (IRS)
Half the tax comes back as an adjustment to income
When you owe self-employment tax, you get to deduct one-half of it as an adjustment to income when you file your individual income tax return. This means the deduction is taken on your Form 1040 and reduces your adjusted gross income, even if you do not itemize your deductions. The adjustment is available to everyone who pays self-employment tax, regardless of whether you use the standard deduction or itemize. The purpose of this rule is to recognize that self-employed individuals pay both the employer and employee shares of social security and Medicare taxes, while wage earners only pay the employee share and their employer pays the other half. By allowing the deduction of the employer-equivalent portion, the tax system puts self-employed people on a more equal footing with employees for income tax purposes. The full self-employment tax rate is 15.3%, split between 12.4% for social security and 2.9% for Medicare, and half of the total computed tax is what you deduct as an adjustment to income.
Deduct one-half of your SE tax as an adjustment to income on line 27 of Form 1040.
Publication 334 (2017), Tax Guide for Small Business (IRS)
Only 92.35% of net earnings is actually taxed
When you calculate self-employment tax, you do not apply the tax rate to your full net earnings from self-employment. Instead, you first multiply your self-employment earnings by 92.35%, and only that reduced amount is subject to the tax. This 92.35% figure reflects the fact that self-employed people can deduct the employer-equivalent portion of their social security and Medicare taxes before the tax is calculated. For example, if your net earnings from self-employment are a certain amount, you multiply that amount by 92.35% (or 0.9235) to get your taxable earnings for self-employment tax purposes. Then the full 15.3% rate, composed of 12.4% for social security and 2.9% for Medicare, is applied to that reduced figure. This multiplication step is part of the regular method for figuring net earnings on Schedule SE, and it applies to both the Short Schedule SE and the Long Schedule SE. The reduction ensures that self-employed individuals are not taxed on the portion of their earnings that represents the employer share of the tax.
multiply your self-employment earnings by 92.35% (0.9235).
Publication 334 (2017), Tax Guide for Small Business (IRS)
Nobody withholds it, so you pay it quarterly
Because self-employment income does not have taxes withheld from it the way wages do, you must pay your self-employment tax through estimated tax payments during the year. You generally have to make estimated tax payments if you expect to owe taxes, including self-employment tax, of a certain amount or more when you file your return. The IRS provides Form 1040-ES, Estimated Tax for Individuals, to help you figure and pay the tax throughout the year. If you do not pay enough during the year through withholding or estimated payments, you may owe a penalty for underpayment when you file your return. Self-employed individuals typically need to make quarterly estimated tax payments to cover both their income tax and their self-employment tax obligations. The self-employment tax rate is 15.3%, consisting of 12.4% for social security and 2.9% for Medicare, applied to 92.35% of your net earnings. Failing to make adequate estimated payments can result in penalties, so it is important to plan for these obligations throughout the year rather than waiting until filing time.
You generally have to make estimated tax payments if you expect to owe taxes, in- cluding self-employment tax (discussed later), of $1,000 or more when you file your return.
Publication 334 (2017), Tax Guide for Small Business (IRS)
A fiscal-year filer locks in the rate as of the start of their tax year
For federal self-employment tax purposes, a taxpayer who operates on a fiscal year (a tax year other than the calendar year) must use the tax rate and maximum earnings limit that are in effect at the beginning of that tax year. This means the applicable rate is locked in as of the first day of the fiscal year, even if the rate or the earnings limit changes during the course of the tax year. The taxpayer continues to use that same rate and limit throughout the entire tax year. For example, if a fiscal year begins on July 1, 2017, the 2017 rate applies for the full fiscal year, regardless of any changes that take effect on January 1, 2018. In 2017, the overall self-employment tax rate was 15.3%, consisting of a 12.4% social security rate and a 2.9% Medicare rate, applied to 92.35% of net earnings from self-employment.
If you use a tax year other than the calendar year, you must use the tax rate and maximum earnings limit in effect at the beginning of your tax year. Even if the tax rate or maximum earnings limit changes during your tax year, continue to use the same rate and limit throughout your tax year.
Publication 334 (2017), Tax Guide for Small Business (IRS)
In-home caregivers are usually employees, not self-employed, however it feels
The IRS explains that in-home caregivers - people who perform services for elderly or disabled individuals - are generally treated as employees of those individuals rather than as self-employed independent contractors. This classification applies because caregivers work in the homes of the people they assist, and those individuals retain the right to direct what the caregivers do. Whether or not the caregiver is a family member does not change this rule. Because the caregiver is an employee, the income received is reported on Form W-2 and is subject to employment taxes rather than the self-employment tax. For 2017, the self-employment tax is 15.3%, composed of a 12.4% social security portion and a 2.9% Medicare portion, and it is computed on 92.35% of a self-employed person's net earnings, with the social security part capped at $127,200. A caregiver classified as an employee does not pay this tax on care income. In some situations the employer may not owe employment taxes even though the caregiver's compensation must still appear on a Form W-2; when caregivers are not employees, however, they report the compensation as income and may be required to pay self-employment tax depending on the facts and circumstances.
Caregivers are typically employees of the individuals for whom they provide services because they work in the homes of the elderly or disabled individuals and these individuals have the right to tell the caregivers what needs to be done.
Family caregivers and self-employment tax (IRS)
Above a threshold, self-employment income also owes the 0.9% Additional Medicare Tax
In addition to the regular 15.3% self-employment tax (12.4% for Social Security and 2.9% for Medicare), self-employed individuals in the United States may owe a 0.9% Additional Medicare Tax on net earnings that exceed certain threshold amounts. These thresholds depend on filing status: $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for single, head of household, or qualifying widow(er). If a taxpayer has both wages and self-employment income, the threshold applied to the self-employment portion is reduced by the wages already subject to the Additional Medicare Tax, though not below zero. This extra tax is calculated and reported on Form 8959. Unlike the regular Medicare portion of the SE tax, which applies to all net earnings, the Additional Medicare Tax only applies above these income levels.
Additional Medicare Tax. A 0.9% Additional Medicare Tax may apply to you if your net earnings from self em- ployment exceeds one of the following threshold amounts (based on your filing status). Married filing jointly—$250,000 Married filing separately—$125,000 Single, Head of Household, or Qualifying Widow(er)—$200,000 If you have both wages and self-employment income, the threshold amount for applying the Additional Medicare Tax on the self-employment income is reduced (but not below zero) by the amount of wages subject to Additional Medicare Tax. Use Form 8959, Additional Medicare Tax, to figure this tax.
Publication 334 (2017), Tax Guide for Small Business (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 334 (2017), Tax Guide for Small Business (IRS)
- Rate
SE tax rate. The SE tax rate on net earnings is 15.3% (12.4% social security tax plus 2.9% Medicare tax).
SE tax rate. The SE tax rate on net earnings is 15.3% (12.4% social security tax plus 2.9% Medicare tax).
- Medicare rate
SE tax rate. The SE tax rate on net earnings is 15.3% (12.4% social security tax plus 2.9% Medicare tax).
To figure net earnings using the regular method, multiply your self-employment earnings by 92.35% (0.9235).
- Maximum net earnings subject to the social security part
Maximum net earnings. The maximum net self-employ- ment earnings subject to the social security part of the self-employment tax remains $127,200 for 2017.