2020 Self-Employment Tax
For 2020, the Self-Employment Tax figures are 15.3% (Rate), 12.4% (Social security rate), 2.9% (Medicare rate) and 2 more figures below.
Effective 2020-01-01Source: Publication 334 (2020), Tax Guide for Small Business (IRS)Verified 2026-09-04
Compared with 2019
| Item | 2019 | 2020 | 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 | $132,900 | $137,700 | +$4,800 (+3.6%) |
Who it applies to
Self-employed individuals and church employees meeting the income thresholds established by the IRS.
What changed this year, and why
For 2020, the self-employment tax rate on net earnings is 15.3%. The 15.3% rate is made of two parts: 12.4% for social security and 2.9% for Medicare. Both parts are charged on the same net earnings from self-employment, and only the social security part stops at the year’s wage base.
Common questions
- What are the two parts of the 2020 self-employment tax rate?
- The self-employment tax rate of 15.3% consists of 12.4% for social security and 2.9% for Medicare. The 12.4% social security part applies only up to the year’s social security wage base, while the 2.9% Medicare part applies to all net earnings from self-employment with no ceiling of its own.
The $400 threshold that makes Schedule SE mandatory
You must file Schedule SE (Form 1040) and pay self-employment tax if your net earnings from self-employment, excluding church employee income, were $400 or more in 2020. This $400 threshold is the bright line that turns self-employment activity into a filing obligation. Church employee income is handled under a separate, lower threshold and is not counted toward this $400 test. Once your net earnings reach $400, the full self-employment tax at the 15.3% rate (12.4% for Social Security and 2.9% for Medicare) is computed on 92.35% of those net earnings. The threshold applies regardless of whether the work was full-time or occasional, and regardless of whether you also have wages from a job where Social Security and Medicare taxes are already withheld. If you fall below $400, you do not file Schedule SE on that basis; if you are at or above it, you file and compute the tax due.
Your net earnings from self-employment (excluding church employee income) were $400 or more.
Publication 334 (2020), Tax Guide for Small Business (IRS)
Church employee income is taxed from $108.28
Church employees have a special, lower threshold for self-employment tax. If your church employee income was $108.28 or more, you must pay SE tax and file Schedule SE (Form 1040). This threshold is much lower than what applies to regular self-employment earnings, because church employee income is treated as self-employment income for tax purposes even though you are technically an employee. The church does not withhold Social Security or Medicare taxes from your wages, so you are responsible for paying both the employer and employee share. Once you meet this $108.28 threshold, you compute your self-employment tax at the 15.3% rate (12.4% Social Security and 2.9% Medicare) on 92.35% of your net earnings. If your church employee income is below $108.28, you do not owe self-employment tax on that income.
You had church employee income of $108.28 or more.
Publication 334 (2020), Tax Guide for Small Business (IRS)
Age and drawing benefits do not exempt you
You must pay self-employment tax on your net earnings regardless of your age. Even if you are already receiving social security or Medicare benefits, you still owe the 15.3% self-employment tax on your self-employment income. Many people mistakenly believe that once they reach retirement age or start collecting benefits, they are exempt from paying self-employment tax. That is not true. If your net earnings from self-employment meet the threshold, you must pay the full 15.3% rate (12.4% for social security and 2.9% for Medicare) on 92.35% of your net earnings. The only way to avoid this tax is to have no self-employment income or to fall below the applicable threshold. Age and benefit status do not provide any exemption from self-employment tax obligations.
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 (2020), Tax Guide for Small Business (IRS)
Half the tax comes back as an adjustment to income
Deduct one-half of your SE tax as an adjustment to income on line 14 of Schedule 1 (Form 1040). This means that after you calculate your full self-employment tax at the 15.3% rate (12.4% Social Security plus 2.9% Medicare) on 92.35% of your net earnings, you can claim half of that amount as an adjustment to your gross income on your individual income tax return. This deduction reduces your adjusted gross income, which in turn reduces your income tax liability. It is not a business expense and does not appear on Schedule C; it is an above-the-line adjustment. The deduction applies only to the income tax calculation and does not reduce your self-employment tax itself. This provision exists because the employer share of Social Security and Medicare is deductible for businesses, and this rule gives self-employed taxpayers a comparable benefit by allowing them to deduct one-half of the SE tax, which represents the employer-equivalent portion.
Deduct one-half of your SE tax as an adjustment to income on line 14 of Schedule 1 (Form 1040).
Publication 334 (2020), Tax Guide for Small Business (IRS)
Only 92.35% of net earnings is actually taxed
To figure net earnings using the regular method, multiply your self-employment earnings by 92.35% (0.9235). This means that only 92.35% of your net earnings from self-employment is subject to the 15.3% self-employment tax rate (12.4% Social Security and 2.9% Medicare). The IRS applies this reduction because it represents the employer-equivalent portion of the tax. A regular employee does not pay Social Security and Medicare taxes on the employer's share of FICA; similarly, the IRS allows self-employed taxpayers to exclude a corresponding share from the tax base. The result appears on line 4a of Schedule SE (Form 1040). Net earnings figured using the regular method are also called actual net earnings. For example, if you had net self-employment earnings of any dollar amount, you would multiply that amount by 92.35% and pay the 15.3% tax on the product, not on the full amount.
To figure net earnings using the regular method, multiply your self-employment earnings by 92.35% (0.9235). For your net earnings figured using the regular method, see line 4a of your Schedule SE (Form 1040).
Publication 334 (2020), Tax Guide for Small Business (IRS)
Nobody withholds it, so you pay it quarterly
When you are self-employed, no employer is withholding self-employment tax from your pay. Estimated tax payments. You generally have to make estimated tax payments if you expect to owe taxes, including self-employment tax (discussed later), of $1,000 or more when you file your return. This means you must calculate and pay your SE tax four times during the year, in quarterly installments, rather than waiting until you file your annual return. Use Form 1040-ES to figure and pay these installments. If you do not make sufficient estimated payments throughout the year, you may owe a penalty for underpayment. If you do owe $1,000 or more in total tax, including the 15.3% SE tax on 92.35% of your net earnings, you must plan for quarterly payments to avoid this penalty. If you expect to owe less than that threshold, you can pay the full amount when you file your return instead.
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 (2020), 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 first day of the tax year. Even if the rate or limit changes during the year, the filer continues to use the same rate and limit throughout the entire tax year. This means that a fiscal-year taxpayer does not adjust mid-year if a new rate takes effect; they apply the rate that was in effect on the day their tax year began. For 2020, the overall Self-Employment Tax rate is 15.3%, composed of a 12.4% Social Security rate and a 2.9% Medicare rate, and 92.35% of net earnings from self-employment is the share subject to tax. A fiscal-year filer whose tax year started in 2020 uses these 2020 figures for the full year, regardless of any later change.
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 (2020), Tax Guide for Small Business (IRS)
In-home caregivers are usually employees, not self-employed, however it feels
The IRS treats in-home caregivers who provide services for elderly or disabled individuals as employees of the people they help, even when the arrangement feels informal. This is because the caregiver works inside the individual's home, and that individual keeps the right to direct what the caregiver does and how it is done. The caregiver may be a family member or an unrelated worker; the family relationship does not by itself change the classification. When a caregiver is classified as an employee, the person receiving care is the employer and may owe employment taxes, although certain relatives - such as a spouse, a child under age 21, or a parent (subject to exceptions) - can in some cases be exempt from employment-tax obligations while still having their wages reported on Form W-2. In the less common situation where the caregiver is not an employee, the caregiver reports the compensation as income and may owe self-employment tax, depending on the facts. The self-employment tax rate that can apply in those cases is 15.3%, made up of a 12.4% social security part and a 2.9% Medicare part.
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 2020, self-employed taxpayers whose net earnings from self-employment exceed certain thresholds also owe a 0.9% Additional Medicare Tax on top of the regular 2.9% Medicare part of the self-employment tax. The threshold at which this additional tax begins to apply depends 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 income is reduced - though not below zero - by the amount of wages that are already subject to the Additional Medicare Tax through withholding. The additional tax is calculated and reported on Form 8959 (Additional Medicare Tax), which is filed with the individual income tax return.
Deduct one-half of your SE tax as an adjustment to income on line 14 of Schedule 1 (Form 1040). Additional Medicare Tax. A 0.9% Additional Medicare Tax may apply to you if your net earnings from self-em- ployment exceed 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 (2020), 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 (2020), Tax Guide for Small Business (IRS)
- Rate
SE tax rate. The 2020 SE tax rate on net earnings is 15.3% (12.4% social security tax plus 2.9% Medicare tax).
SE tax rate. The 2020 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 2020 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 $137,700 for 2020.