Side Hustle Tax Calculator

Self-Employment Tax Calculator (2024)

Calculate the 15.3% self-employment tax on your freelance, gig, or side hustle income. See exactly how much goes to Social Security (12.4%) and Medicare (2.9%), and how much you can deduct.

Calculate Your Self-Employment Tax

$

Gross income minus business expenses

$

Reduces Social Security portion if near wage base

Total Self-Employment Tax

$7,065

Effective SE tax rate: 14.1% of net income

Tax Breakdown

Net SE Income

Your starting amount

$50,000

Taxable SE Earnings (92.35%)

$50,000 x 0.9235

$46,175

Social Security Tax (12.4%)

On $46,175 (wage base: $168,600)

$5,726

Medicare Tax (2.9%)

On all SE earnings (no cap)

$1,339

Total Self-Employment Tax

$7,065

Deductible Half (reduces AGI)

You deduct 50% of SE tax from income

-$3,532

How Self-Employment Tax Works

Step 1:Multiply net SE income by 92.35% to get taxable SE earnings. This adjustment accounts for the "employer" half of FICA.

Step 2: Apply 12.4% Social Security tax on earnings up to $168,600 (minus any W-2 wages already taxed).

Step 3: Apply 2.9% Medicare tax on all SE earnings (no cap). Add 0.9% Additional Medicare Tax on earnings over $200,000.

Step 4: Deduct half of the total SE tax from your adjusted gross income on Form 1040.

Understanding the 15.3% Self-Employment Tax

When you work as a W-2 employee, your employer pays half of your Social Security and Medicare taxes (7.65%), and you pay the other half through payroll deductions. As a self-employed individual, you are both the employer and employee — so you pay the full 15.3%.

The 15.3% breaks down into two components: 12.4% for Social Security (capped at the wage base of $168,600 in 2024) and 2.9% for Medicare (no income cap). If your earnings exceed $200,000 ($250,000 married filing jointly), you also pay an additional 0.9% Medicare surtax.

The IRS applies SE tax to 92.35% of your net self-employment income rather than 100%. This adjustment simulates the fact that employers don't pay FICA tax on the employer's share of FICA — it reduces your taxable base slightly.

The Half-of-SE-Tax Deduction

You can deduct the employer-equivalent portion (50%) of your self-employment tax when calculating your adjusted gross income (AGI). This is reported on Schedule SE and transferred to Form 1040.

This deduction reduces your income tax but does not reduce your self-employment tax itself. For example, if your SE tax is $7,650, you can deduct $3,825 from your AGI, which might save you $840-$1,415 in income tax depending on your bracket.

SE Tax vs. FICA: What's the Difference?

FICA (Federal Insurance Contributions Act) and self-employment tax fund the same programs — Social Security and Medicare. The difference is who pays:

  • FICA: Split 50/50 between employer (7.65%) and employee (7.65%). Total: 15.3%.
  • SE Tax:You pay the full 15.3% because you're both employer and employee. But you get to deduct half.

The net cost is slightly less than 15.3% because of the 92.35% adjustment and the half-deduction. Your effective SE tax rate ends up around 14.1% of net income.

Frequently Asked Questions

What is the self-employment tax rate for 2024?

The self-employment tax rate is 15.3%, consisting of 12.4% for Social Security and 2.9% for Medicare. This is applied to 92.35% of your net self-employment income.

Who has to pay self-employment tax?

Anyone who earns $400 or more in net self-employment income must pay SE tax. This includes freelancers, independent contractors, gig workers, sole proprietors, and partners in a partnership.

Can I deduct self-employment tax?

Yes, you can deduct the employer-equivalent portion (half) of your self-employment tax when calculating your adjusted gross income. This is an above-the-line deduction on Schedule SE.

What is the Social Security wage base for 2024?

The Social Security wage base for 2024 is $168,600. You only pay the 12.4% Social Security portion on earnings up to this amount. Any W-2 wages count toward this cap first.

Is self-employment tax the same as income tax?

No. Self-employment tax covers Social Security and Medicare contributions (similar to FICA for employees). You pay SE tax in addition to federal and state income tax on your earnings.

How do I reduce my self-employment tax?

Reduce SE tax by maximizing legitimate business deductions (which lower net SE income), electing S-Corp status if income is high enough, or hiring family members. You cannot avoid SE tax through retirement contributions.

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