2018 Self-Employment Tax
For 2018, the Self-Employment Tax figures are 15.3% (Rate), 12.4% (Social security rate), 2.9% (Medicare rate) and 2 more figures below.
Effective 2018-01-01Source: Publication 334 (2018), Tax Guide for Small Business (IRS)Verified 2026-09-04
Compared with 2017
| Item | 2017 | 2018 | 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 | $127,200 | $128,400 | +$1,200 (+0.9%) |
Who it applies to
Individuals who have net earnings from self-employment and must pay Self-Employment Contributions Act (SECA) tax
What changed this year, and why
For 2018, the self-employment tax rate is 15.3%, consisting of a 12.4% Social Security part and a 2.9% Medicare part. The Social Security part applies only to 92.35% of net self-employment earnings. There is no maximum limit on earnings subject to the Medicare part. These rates are the same as in 2017.
Common questions
- How is self-employment tax calculated?
- Self-employment tax is calculated on 92.35% of your net earnings from self-employment. There is no cap on the Medicare portion (2.9%).
- Is the self-employment tax rate the same as the FICA rate for employees?
- Yes. The total SECA rate is 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare. These are the same rates as in 2017.
- What changed from 2017 to 2018?
- The share of net earnings subject to self-employment tax (92.35%), the Social Security rate (12.4%), and the Medicare rate (2.9%) were all unchanged from 2017.
The $400 threshold that makes Schedule SE mandatory
If your net earnings from self-employment, not counting any church employee income, reach $400 or more during the year, you are required to pay self-employment tax and file Schedule SE (Form 1040). This $400 threshold is the triggering point; below it, no SE tax is owed on self-employment earnings. Once you cross it, the full self-employment tax rate of 15.3% applies to your taxable earnings. That 15.3% rate is made up of two parts: a 12.4% social security portion and a 2.9% Medicare portion. However, you do not pay the tax on your entire net profit. Only 92.35% of your net earnings from self-employment is treated as the taxable base, which effectively reduces the burden slightly before the 15.3% rate is applied. Church employees have a separate, lower threshold and are covered under a different rule.
Your net earnings from self-employment (excluding church employee income) were $400 or more.
Publication 334 (2018), Tax Guide for Small Business (IRS)
Church employee income is taxed from $108.28
Church employees are treated differently from other employees when it comes to self-employment tax. Instead of having the tax withheld by an employer, a church employee must pay SE tax directly if their church employee income reached $108.28 or more during 2018. This is a notably lower threshold than the one that applies to other self-employment income, reflecting the special treatment Congress gave this category. If you had both regular self-employment earnings and church employee income, the two amounts are tested separately under their own rules. Meeting either test means you must file Schedule SE. Once the tax is triggered, the combined 15.3% rate applies to 92.35% of the applicable earnings, broken into a 12.4% social security part and a 2.9% Medicare part.
You had church employee income of $108.28 or more.
Publication 334 (2018), Tax Guide for Small Business (IRS)
Age and drawing benefits do not exempt you
There is no age-based escape from self-employment tax. No matter how advanced in years you are, the tax still applies to any net earnings from self-employment that meet the filing threshold. The same is true if you are already receiving social security retirement benefits or Medicare. Some taxpayers assume that because they are past retirement age they no longer owe the tax, but the rules explicitly reject that idea. The 15.3% rate, split into a 12.4% social security part and a 2.9% Medicare part, is still imposed on 92.35% of your net earnings. Filing status and receipt of benefits do not change the underlying obligation: if your net earnings reach the threshold, Schedule SE must be filed and the tax paid.
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 (2018), Tax Guide for Small Business (IRS)
Half the tax comes back as an adjustment to income
Self-employment tax is paid in full by the taxpayer, unlike an employee who splits social security and Medicare taxes with an employer. To offset this, the law allows you to deduct one-half of your SE tax as an adjustment to income on your individual return. This deduction is taken on line 27 of Schedule 1 (Form 1040), which means you can claim it even if you do not itemize your deductions. The effect is that only the employer-equivalent half of the tax remains as a true cost; the other half reduces your adjusted gross income and therefore also reduces your income tax. For 2018, with a combined SE tax rate of 15.3% applied to 92.35% of net earnings, this above-the-line deduction is an important relief that lowers the overall burden.
Deduct one-half of your SE tax as an adjustment to income on line 27 of Schedule 1 (Form 1040).
Publication 334 (2018), Tax Guide for Small Business (IRS)
Only 92.35% of net earnings is actually taxed
The full amount of your self-employment profit is not what gets taxed. Under the regular method, you multiply your self-employment earnings by 92.35% to arrive at the net earnings figure that is actually subject to the tax. This reduction is meant to approximate the employer share of social security and Medicare taxes that a self-employed person effectively bears in addition to the employee share. For 2018, the resulting net earnings figure is then taxed at the combined 15.3% rate, which breaks down into a 12.4% social security part and a 2.9% Medicare part. Because of this 92.35% factor, the effective burden is somewhat less than it would be if the tax were imposed on the gross profit.
To figure net earnings using the regular method, multiply your self-employment earnings by 92.35% (0.9235).
Publication 334 (2018), Tax Guide for Small Business (IRS)
Nobody withholds it, so you pay it quarterly
Unlike wages from an employer, nobody is withholding self-employment tax from the money you earn. That means you are responsible for paying both the SE tax and your income tax as you go through the year, using the estimated tax system. You generally have to make estimated tax payments if you expect to owe taxes, including self-employment tax, of $1,000 or more when you file your return. The IRS provides Form 1040-ES to help you figure the amount and submit the payments, which are due quarterly. If you fail to pay enough through withholding or estimated payments, you may face an underpayment penalty on the shortfall. Proper quarterly planning avoids that penalty and keeps you current on your 15.3% SE tax obligation, which is computed on 92.35% of your net earnings.
Estimated tax payments. 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 (2018), Tax Guide for Small Business (IRS)
A fiscal-year filer locks in the rate as of the start of their tax year
For fiscal-year filers, the self-employment tax rate and maximum earnings limit are locked in as of the start of the tax year, regardless of any changes during the year.
If you use a tax year other than the calendar year, you must use the tax rate and maximum earnings limit in effect Page 44 Chapter 10 Self-Employment (SE) Tax at the beginning of your tax year.
Publication 334 (2018), Tax Guide for Small Business (IRS)
In-home caregivers are usually employees, not self-employed, however it feels
Under federal employment tax rules, an in-home caregiver - including a family member who looks after an elderly or disabled person - is usually treated as an employee of the individual receiving the care. The IRS's reason is that the caregiver works inside that individual's home and the individual (or the individual's family) has the right to direct what the caregiver does and how it is done, which is the classic employer/employee relationship. Because of this classification, the compensation the caregiver receives is not self-employment income and is generally not subject to the self-employment tax made up of the 12.4% social security part and the 2.9% Medicare part. Even in narrow situations where the caregiver is a close relative such as a spouse or young child, the payer still typically reports the wages on a Form W-2 rather than treating the caregiver as self-employed. Only in the less common situation where the facts show the caregiver is not an employee does the caregiver report the pay as income and possibly owe the combined 15.3% self-employment tax on 92.35% of the net earnings, with the social security portion capped at the maximum net earnings of $128,400.
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
For 2018, the IRS imposes a 0.9% Additional Medicare Tax on self-employment income that exceeds certain threshold amounts determined by filing status. The thresholds are: $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately, and $200,000 for single filers, heads of household, and qualifying widow(er)s. This additional tax is separate from the regular 2.9% Medicare portion of the self-employment tax and applies only to earnings above the applicable threshold. Taxpayers who have both wage income and self-employment income must reduce the threshold (but not below zero) by the amount of wages already subject to the Additional Medicare Tax. Form 8959 is used to calculate this tax.
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 (2018), 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 (2018), 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 is $128,400 for 2018.