2025 Self-Employment Tax

Who it applies to

You must pay self-employment tax and file Schedule SE with Form 1040 if your net earnings from self-employment, excluding church employee income, reached the amount the IRS states, or if you had church employee income of at least the separate amount it states. Sole proprietors and independent contractors generally use Schedule C, Profit or Loss from Business, to figure net earnings first, then Schedule SE to figure the tax. The rules apply no matter how old you are, and they apply even if you are already receiving Social Security or Medicare. Special rules cover workers who perform in-home services for elderly or disabled individuals: caregivers are typically employees of the individuals for whom they provide services, because they work in those individuals' homes and the individuals have the right to tell the caregiver what needs to be done.

What changed this year, and why

The self-employment tax rate is 15.3%. Self-employment tax is Social Security and Medicare tax for individuals who work for themselves, and the rate has a Social Security part covering old-age, survivors, and disability insurance, and a Medicare part covering hospital insurance. It is the counterpart of the Social Security and Medicare taxes an employer withholds from a wage earner's pay, with one practical difference: an employer calculates those taxes for a wage earner, while a self-employed person figures self-employment tax themselves on Schedule SE, Self-Employment Tax, filed with Form 1040. The Social Security part stops applying once combined wages, tips and net earnings reach the annual maximum, while the Medicare part applies to all net earnings with no such ceiling. 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 is the self-employment tax rate for 2025?

The self-employment tax rate is 15.3%. It applies to net earnings from self-employment rather than to gross receipts, so business expenses come out before the rate is applied. You calculate it yourself on Schedule SE, Self-Employment Tax, which is filed with Form 1040, rather than having an employer work it out and withhold it from your pay.

What does self-employment tax actually pay for?

It is Social Security and Medicare tax, and nothing else. The Social Security part funds old-age, survivors, and disability insurance; the Medicare part funds hospital insurance. Together they make up the 15.3% rate. When the IRS uses the term self-employment tax it means only these two, so it does not include income tax or any of the other taxes a self-employed person may owe on the same earnings.

Can I deduct my self-employment tax?

You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income. That deduction only affects your income tax. It does not reduce your net earnings from self-employment and it does not reduce the self-employment tax itself, so the 15.3% still applies to the same net earnings. Wage earners cannot deduct the Social Security and Medicare taxes withheld from their pay.

Who has to pay self-employment tax?

You must pay it and file Schedule SE with Form 1040 if your net earnings from self-employment, other than church employee income, reached the amount the IRS states for the year, or if you had church employee income of at least the separate amount it states. Sole proprietors and independent contractors generally figure those net earnings on Schedule C before completing Schedule SE.

Do I still pay self-employment tax if I already collect Social Security or Medicare?

Yes. The IRS states that the self-employment tax rules apply no matter how old you are, and even if you are already receiving Social Security or Medicare. There is no age at which net earnings from self-employment stop being subject to the tax, so the 15.3% rate still reaches a business run after retirement in the same way it reaches one run before it.

Is there a cap on self-employment tax?

Only on part of it. A maximum applies each year to the combined wages, tips and net earnings subject to the Social Security portion of self-employment tax, Social Security tax, or railroad retirement tax. Once your wages and tips subject to those taxes reach that maximum, you do not pay the Social Security portion on your net earnings. The Medicare portion has no ceiling and applies to all your net earnings.

Is there an additional Medicare tax on self-employment income?

Yes. You are liable for an additional Medicare tax if your wages, compensation, or self-employment income, together with your spouse's if you file a joint return, exceed a threshold amount for your filing status. The IRS sets separate thresholds for married filing jointly, married filing separately, single, head of household with a qualifying person, and qualifying surviving spouse with a dependent child. It sits on top of the 15.3% rate.

How do I pay self-employment tax during the year?

To pay self-employment tax you must have a Social Security number or an individual taxpayer identification number. As a self-employed individual you may have to file estimated taxes quarterly, and those estimated payments are how self-employment tax is normally paid across the year rather than in one amount at filing. Publication 505, Tax Withholding and Estimated Tax, covers the detail.

What are the two parts of the 2025 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.

Every amount on this page is a published figure rather than yours. The Net earnings subject to self-employment tax takes the number you enter and works it out against them, showing which published figure it used.