What is the self-employed tax rate? (Taxes for self-employed)

Reading Time: 3 minutes

What is the self-employed tax rate, explained. How much you have to pay, and how to calculate. Keep reading.

What is the self-employed tax rate? Taxes for self-employed.
Learn about what is the self-employment tax rate, and how to calculate it. Read below.

Working for yourself is empowering.

You have a lot of freedom and you run your own show.

However, this comes with extra responsibility. Such as extra complexities when it comes time to do your taxes. When you’re self-employed or an independent contractor and your 1099’s start coming in, your stress probably goes up (just a bit). Also, you’re often alone when it comes time to do your self-employed taxes alone. 

That’s why we created this article. To help you understand self-employed tax rates. In this article we explain self-employed taxes, and what they are. In addition, we explain how to calculate self-employed taxes. Further, we provide sample calculations.

What is self employed tax?

You’re probably asking yourself, ‘what is self-employed tax? if you work for yourself.
Self-employed tax is Social Security and Medicare tax you pay when you work for yourself. Social Security and Medicare tax are automatically taken from your paycheck when you work for someone else (i.e. when you’re an employee).  

How are self employed taxes different from other taxes?

Self-employment tax is different from other taxes because it is a tax that specifically contributes to Social Security and Medicare.

What is Social Security?

Social Security is a Federal insurance program that provides benefits to those that are retired, disabled, or unemployed. For example, the checks you receive from the government after you retire, come from the money you contribute to Social Security each month from your paycheck. Throughout your life, you contribute a small portion of your income to social security. Therefore, when you retire you get it back in a monthly social security benefits check for the rest of your life.

What is Medicare?

Medicare is health insurance provided by the government for people over 65, some younger people with disabilities, and people with end-stage renal disease. Therefore, when you retire, along with your Social Security check you get Medicare benefits.

How much self employment tax do I pay?

The self-employment tax rates are as follows:
The self-employment tax rate is 15.3%.

This rate consists of two parts:

12.4% for social security
2.9% for Medicare

How can I reduce my self employed tax rates?

Self-employed tax rates are specified by the IRS. You cannot change the self-employed tax rate or get it lowered. Each person that works for themselves pays the same rate.

How self employed pay tax?

To pay self-employment tax you need a social security number (SSN) or an individual taxpayer identification number (ITIN).

At the end of the year, you complete and file a tax return and submit it to the IRS by April 15th. To file a tax return you need to complete Form 1040, attach an IRS Schedule C form, and submit it to the IRS.

That’s how self-employed pay tax.

How do I calculate self employed tax?

Self-employment tax seems high. You have seen the self-employed tax rate explained above. However, the good news is you only calculate self-employment tax on net earnings. Not gross earnings. This means you calculate self-employment tax after you have subtracted self-employed tax deductions.

What are self employed tax write-offs?

While we’re on the topic of self-employed tax rates, and what you have to pay, we thought we would give you a little direction about how to reduce your self-employment taxes.

Self-employed have many tax deductions available to take advantage of. We suggest you check out this article for a full list of all self-employed tax deductions you should consider.

A Definitive Guide to Self Employed Tax Write Offs

When is self employed taxes due?

Self-employed taxes are due April 15th like most other individual taxes. Most self-employed choose to be taxed as sole proprietors. This means they file a Form 1040 and attach a Schedule C.

Self employed taxes form

Below are links to the most common self-employed tax forms provided by the IRS. The tax forms linked below are what self-employed use to do their taxes.

Form 1040

Schedule C Form


Self-employed tax and self-employed tax rates are not complicated. Once you understand a bit about the self-employed tax rate, and how to calculate it, it becomes easier to understand. More importantly, it’s easier to do your taxes. We hope after reading this article you feel more informed and if you have any further questions leave them in the comments below (or email us).

Was this article helpful?

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *