2021 Self-Employment Tax
For 2021, the Self-Employment Tax figures are 15.3% (Rate), 12.4% (Social security rate), 2.9% (Medicare rate) and 2 more figures below.
Effective 2021-01-01Source: Publication 334 (2021), Tax Guide for Small Business (IRS)Verified 2026-09-04
Compared with 2020
| Item | 2020 | 2021 | 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 | $137,700 | $142,800 | +$5,100 (+3.7%) |
Who it applies to
Individuals who work for themselves and have net earnings from self-employment
What changed this year, and why
The self-employment tax rate for 2021 remains 15.3%, unchanged from 2020, consisting of a 12.4% social security rate and a 2.9% Medicare rate.
Common questions
- What is the self-employment tax rate for 2021?
- The self-employment tax rate for 2021 is 15.3%.
- How is the 15.3% self-employment tax rate broken down?
- The 15.3% rate consists of 12.4% for social security and 2.9% for Medicare.
- Did the self-employment tax rate change from 2020 to 2021?
- No. The overall rate remained 15.3% in both years, with the social security rate at 12.4% and the Medicare rate at 2.9%.
The $400 threshold that makes Schedule SE mandatory
For 2021, if your net earnings from self-employment (excluding church employee income) reach $400 or more, you are required to pay SE tax and file Schedule SE (Form 1040). This $400 threshold is what triggers the filing obligation for most self-employed individuals, including sole proprietors and independent contractors. The rule applies regardless of whether you are already receiving Social Security or Medicare benefits, and regardless of your age. Church employees face a separate, lower threshold and are not included in this $400 calculation. Once your net earnings meet or exceed $400, the full self-employment tax rate of 15.3% applies to your earnings (after multiplying by 92.35%). This tax funds both Social Security and Medicare, and failure to pay it when required can result in penalties.
You must pay SE tax and file Schedule SE (Form 1040) if either of the following applies. 1. Your net earnings from self-employment (excluding church employee income) were $400 or more.
Publication 334 (2021), Tax Guide for Small Business (IRS)
Church employee income is taxed from $108.28
Most self-employed people trigger the SE tax at a higher threshold for net earnings, but church employees face a much lower dollar figure. If you work as an employee of a church or qualified church-controlled organization that is exempt from Social Security and Medicare taxes, you must pay SE tax and file Schedule SE when your church employee income reaches $108.28 or more in a year. The amount is deliberately low so that even modest earnings in this role are captured. Unlike regular employees whose FICA taxes are withheld by their employer, church employees in this situation are treated as self-employed for Social Security and Medicare purposes, meaning the full 15.3% rate applies to the earnings - split between the 12.4% social security portion and the 2.9% Medicare portion - and no employer share is involved. The $108.28 figure has been the statutory trigger for many years and remains unchanged for 2021.
2. You had church employee income of $108.28 or more.
Publication 334 (2021), Tax Guide for Small Business (IRS)
Age and drawing benefits do not exempt you
Self-employment tax is owed regardless of age or whether you are already drawing Social Security or Medicare benefits. Some people assume that once they start receiving retirement benefits, or once they reach a certain age, they no longer owe SE tax on business income. The IRS explicitly rejects that idea: the rules apply no matter how old you are and even if you are already receiving those benefits. The full 15.3% rate - the 12.4% social security portion plus the 2.9% Medicare portion - still applies to net earnings that cross the filing threshold. The rationale is that SE tax funds the very programs you may already be drawing from, and continued self-employment activity means continued participation in the system. There is no age-based exemption and no exception for retirees who keep a side business or freelance work. The only way to stop owing the tax is to stop earning self-employment income above the minimum threshold.
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 (2021), Tax Guide for Small Business (IRS)
Half the tax comes back as an adjustment to income
When you are self-employed, you owe both the employer and employee shares of Social Security and Medicare tax. Since there is no employer to cover half the cost, the law gives you a corresponding income-tax benefit: you may deduct one-half of your SE tax as an adjustment to income on Schedule 1 (Form 1040). This means the deduction is available whether or not you itemize - it comes off the top of your adjusted gross income. For 2021, the combined SE tax rate is 15.3%, made up of a 12.4% social security portion and a 2.9% Medicare portion. Half of that total burden is treated as a business expense, so only the remaining half effectively reduces your take-home. The deduction does not reduce the SE tax itself; it reduces your federal income tax. You claim it on line 15 of Schedule 1, and the amount flows through to your Form 1040 regardless of whether you take the standard deduction.
Deduct one-half of your SE tax as an adjustment to income on line 15 of Schedule 1 (Form 1040).
Publication 334 (2021), Tax Guide for Small Business (IRS)
Only 92.35% of net earnings is actually taxed
Although SE tax is calculated on your net self-employment earnings, the full amount is not actually subject to the 15.3% rate. The IRS taxes only 92.35% of those earnings. The portion that is excluded represents the employer-equivalent share of Social Security and Medicare taxes that a regular employee never sees because it is paid by the employer. For a self-employed individual, the same economic burden is split: the portion that represents the employer half is excluded from the tax base. To apply the rule, you multiply your net earnings from self-employment by 92.35% (0.9235) and then apply the full 15.3% combined rate - the 12.4% social security part and the 2.9% Medicare part - to that reduced figure. This adjustment appears on line 4a of Schedule SE and ensures that the effective rate on self-employment income roughly matches the combined employer-plus-employee rate that a wage earner pays.
To figure net earnings using the regular method, multiply your self-employment earnings by 92.35% (0.9235).
Publication 334 (2021), Tax Guide for Small Business (IRS)
Nobody withholds it, so you pay it quarterly
Self-employed individuals must make quarterly estimated tax payments if they expect to owe $1,000 or more when they file their return. Unlike employees who have federal income tax and FICA taxes withheld from each paycheck, self-employed people have no withholding mechanism - the IRS expects the tax to be paid as income is earned throughout the year. The payments cover both income tax and self-employment tax, which includes the 15.3% SE tax (12.4% for social security and 2.9% for Medicare). Taxpayers use Form 1040-ES to calculate and remit these quarterly amounts. If you underpay during the year - either by not making estimated payments at all or by paying too little - you may face an underpayment penalty when you file. There are limited exceptions, such as when your total tax liability for the year falls below $1,000 after accounting for withholding and credits, or when you qualify for a safe harbor based on your prior-year tax.
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 (2021), Tax Guide for Small Business (IRS)
A fiscal-year filer locks in the rate as of the start of their tax year
Under the 2021 federal self-employment tax rules, if you use a fiscal year rather than a calendar year, you must use the tax rate and maximum earnings limit in effect at the beginning of your tax year. The combined self-employment tax rate is 15.3%, consisting of a 12.4% Social Security rate and a 2.9% Medicare rate. The tax applies to 92.35% of net earnings from self-employment. Even if the tax rate or maximum earnings limit changes during your fiscal year, you continue to use the same rate and limit that was in effect on the first day of your tax year. You file Schedule SE (Form 1040) to figure and report your SE tax.
Fiscal Year Filer 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 (2021), Tax Guide for Small Business (IRS)
In-home caregivers are usually employees, not self-employed, however it feels
In-home caregivers are usually employees of the people they help, not independent contractors, because they perform services inside those individuals' homes and the care recipients control what work must be done and how. This is true whether or not the caregiver is a family member. When the caregiver is classified as an employee, the care recipient - not the caregiver - is responsible for any employment taxes; the caregiver does not owe self-employment tax on those wages. There are special exceptions that may relieve the household employer of employment-tax obligations when the caregiver employee is the employer's spouse, the employer's child under age 21, the employer's parent (subject to certain exceptions), or a worker under age 18 at any time during the year (also subject to exceptions). Only when a caregiver is not treated as an employee - that is, is truly self-employed under the facts and circumstances - must the caregiver report the compensation as self-employment income and may be required to pay self-employment tax. That tax is 15.3%, made up of a 12.4% Social Security rate on net earnings up to $142,800 for 2021 and a 2.9% Medicare rate on all net earnings, applied to 92.35% of net earnings.
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 2021, self-employed individuals may owe an extra 0.9% Additional Medicare Tax on top of the regular 2.9% Medicare part of the self-employment tax if their net earnings exceed certain threshold amounts. These thresholds depend on filing status: a higher amount for married individuals filing jointly, $125,000 for married filing separately, and $200,000 for single, head of household, or qualifying widow(er). Taxpayers who have both wages and self-employment income must reduce the applicable threshold (but not below zero) by the amount of their wages that are subject to the Additional Medicare Tax. Form 8959 is used to figure the tax.
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—$250,000TIP • 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 (2021), 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 (2021), Tax Guide for Small Business (IRS)
- Rate
The 2021 SE tax rate on net earnings is 15.3%
The 2021 SE tax rate on net earnings is 15.3% (12.4% social security tax plus 2.9% Medicare tax).
- Medicare rate
The 2021 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 $142,800 for 2021.