Key Takeaways
- Self-employment tax is 15.3% (12.4% Social Security + 2.9% Medicare) applied to 92.35% of net self-employment earnings
- For 2024, the Social Security wage base is $168,600; Medicare tax has no wage base limit
- The Additional Medicare Tax of 0.9% applies to self-employment income exceeding $200,000 (Single) or $250,000 (MFJ)
- Self-employed individuals can deduct 50% of self-employment tax as an above-the-line adjustment on Schedule 1, Line 15
- Schedule SE calculates self-employment tax and is required when net self-employment income is $400 or more
Last updated: January 2026
Self-Employment Tax Deduction
What Is Self-Employment Tax?
Self-employment tax is the Social Security and Medicare tax for self-employed individuals. The combined rate is 15.3%:
- 12.4% for Social Security
- 2.9% for Medicare
The 92.35% Multiplier
Net self-employment income is multiplied by 92.35% before calculating tax. This creates parity with W-2 employees.
Formula: Net SE Income × 0.9235 = Taxable SE Earnings
2024 Tax Rates and Limits
| Component | Rate | 2024 Wage Base | Maximum Tax |
|---|---|---|---|
| Social Security | 12.4% | $168,600 | $20,906.40 |
| Medicare | 2.9% | No limit | No maximum |
| Additional Medicare | 0.9% | Over threshold | No maximum |
Additional Medicare Tax Thresholds
| Filing Status | Threshold |
|---|---|
| Single | $200,000 |
| MFJ | $250,000 |
| MFS | $125,000 |
The 50% Deduction
Self-employed individuals can deduct 50% of their self-employment tax on Schedule 1, Line 15. This is an above-the-line deduction that reduces AGI.
Important: This deduction reduces income tax, NOT self-employment tax itself.
Calculation Example
| Step | Description | Amount |
|---|---|---|
| 1 | Net Schedule C profit | $100,000 |
| 2 | × 92.35% | $92,350 |
| 3 | Social Security (12.4%) | $11,451 |
| 4 | Medicare (2.9%) | $2,678 |
| 5 | Total SE Tax | $14,129 |
| 6 | 50% deduction | $7,065 |
EA Exam Tips
- Know the 15.3% rate and the 92.35% multiplier
- 2024 wage base is $168,600
- 50% deduction is on Schedule 1, not Schedule C
- $400 minimum triggers Schedule SE filing
Test Your Knowledge
For 2024, what is the Social Security wage base for self-employment tax?
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B
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D
Test Your Knowledge
A self-employed taxpayer has $80,000 net profit. What amount is subject to self-employment tax?
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B
C
D
Test Your Knowledge
Where is the deductible portion of self-employment tax reported?
A
B
C
D