Self-Employment Tax
The Social Security and Medicare tax that self-employed individuals pay on net earnings — currently 15.3% (12.4% Social Security + 2.9% Medicare).
Self-Employment Tax Definition
Self-employment tax is the self-employed person's version of FICA taxes. When you work for an employer, they pay half of Social Security and Medicare taxes. When you're self-employed, you pay both halves — the full 15.3%.
Rate Breakdown
Who Pays It
Tax Deduction
You can deduct 50% of your self-employment tax on your Form 1040. This is an "above the line" deduction — you get it even if you don't itemize.
How to Reduce Self-Employment Tax
FAQ
Q: Is self-employment tax in addition to income tax?
A: Yes. Self-employment tax is separate from and in addition to federal and state income tax. This is why self-employed people often have a higher effective tax rate.
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