Self-employment tax
Net profit struck into the real Schedule SE math — Social Security, Medicare, and the half you get to deduct back.
Self-employment tax
$11,304
One profit figure, two separate charges
Self-employment tax and income tax are computed from the same net profit but never touch each other directly. The 15.3% above funds your own Social Security and Medicare record — it exists whether or not you owe any income tax at all this year. The deductible half only acts on the income-tax side, at whatever your marginal bracket actually is, which is why the "savings" line above can move even when the SE tax itself doesn't.
SE tax = 15.3% × 92.35% × net profit half of that is deductible from AGI Assumptions on the counter
- Quarterly estimated-payment penalties aren't modeled — this is the annual liability, not a payment schedule.
- State self-employment or franchise taxes vary by state and aren't included.
- "Other taxable income" only sets the bracket for the savings estimate; it isn't itself taxed here.
Questions people ask
Why 92.35% of my profit, not the whole thing?
It stands in for the employer half of FICA that a W-2 job would never tax you on. Multiplying net profit by 92.35% before applying the 15.3% rate keeps a self-employed filer roughly even with an employee earning the same amount, rather than taxing the same dollar as if you were both the employer and the employee.
Why does the Social Security portion sometimes shrink?
It shares the same $184,500 annual cap as W-2 Social Security wages. If you also held a job this year, whatever Social Security wages that job already paid narrows the room left for your self-employment earnings — enter it below and the 12.4% line adjusts.
I've heard I can deduct half of this. Does that erase it?
No — the half-deduction reduces your adjusted gross income for regular income tax purposes; it never reduces the SE tax itself, which is a separate 15.3% charge that funds your own Social Security and Medicare record. Think of it as the IRS quietly acknowledging the 'employer half' shouldn't also be taxed as your income.