How self-employment tax is actually computed
SE tax replaces the Social Security and Medicare taxes an employer would normally split with you — you pay both halves, 15.3% total. But it's not 15.3% of your profit: first multiply net income by 92.35% (this mimics the employer-half deduction employees get), then apply 12.4% Social Security up to the annual wage base (~$184,500 for 2026) and 2.9% Medicare on everything. Example: $80,000 of net income → $73,880 base → $9,161 Social Security + $2,143 Medicare = $11,304 SE tax.
The deductions that soften the blow
Half of your SE tax ($5,652 in the example) is an above-the-line deduction against income tax — you get it even with the standard deduction. Most self-employed people also qualify for the 20% qualified business income (QBI) deduction, can deduct health-insurance premiums, and can shelter large amounts in a Solo 401(k) or SEP-IRA. These don't reduce SE tax itself, but they can cut the income-tax side dramatically — which is why the combined bill in this calculator is an upper-bound sketch, not a return.
Quarterly payments and the S-corp question
The IRS wants tax as you earn: estimated payments are due roughly April 15, June 15, September 15, and January 15, and the safe-harbor rule (pay 100% of last year's tax, 110% if AGI over $150k) avoids penalties. Once profits consistently clear roughly $80-100k, an S-corp election can save SE tax by splitting income into salary (taxed) and distributions (not) — but it adds payroll and filing costs, so run it past a CPA before switching.
How to use this calculator
Enter your net self-employment income — revenue minus deductible business expenses, not gross receipts — and your marginal income-tax bracket. The calculator applies the real mechanics: the 92.35% factor, 12.4% Social Security up to the wage base, 2.9% Medicare, the deductible half of SE tax, and an estimate of federal income tax, then suggests a quarterly amount to set aside. Use it to size your tax reserve as money comes in, not at filing time when the bill is a shock. Because it deliberately ignores the QBI deduction, retirement-plan contributions, health-insurance deductions, credits, and state tax, treat the total as a conservative upper bound — the real figure is often lower once a CPA or tax software applies everything you qualify for.