What is the self-employment tax rate and how is it calculated? Cite only eCFR (www.ecfr.gov) or U.S. Code sources, never irs.gov. Answer in under 100 words.
Details / How it works
Self-employment tax is imposed by 26 U.S.C. § 1401 and implemented by 26 CFR § 1.1401-1. It combines Social Security (OASDI) and Medicare taxes for self-employed individuals. The tax is levied, assessed, and collected as part of the income tax under Subtitle A of the Internal Revenue Code.
Net earnings from self-employment are defined in 26 CFR § 1.1402(a)-1 as gross income derived from a trade or business, less allowable deductions under Chapter 1 of the Code, plus the distributive share (whether or not distributed) of partnership income or loss under section 704. Special rules in §§ 1.1402(a)-3 through 1.1402(a)-17 may apply.
The tax is computed on Schedule SE (Form 1040).
Numbers & thresholds
| Component | Rate | Source |
|---|---|---|
| OASDI (Social Security) | 12.4% | 26 U.S.C. § 1401(a); 26 CFR § 1.1401-1(b)(1) |
| Medicare (Hospital Insurance) | 2.9% | 26 U.S.C. § 1401(b)(1); 26 CFR § 1.1401-1(b)(2)(i) |
| Combined rate | 15.3% | |
| Additional Medicare Tax (surtax) | 0.9% on excess over $200,000 ($250,000 joint) | 26 U.S.C. § 1401(b)(2); 26 CFR § 1.1401-1(b)(2)(ii), (d) |
Thresholds for Additional Medicare Tax (per 26 CFR § 1.1401-1(d)(1)):
- Married filing jointly: $250,000
- Married filing separate: $125,000
- All other: $200,000
These thresholds are reduced by any wages taken into account for FICA Additional Medicare Tax (26 CFR § 1.1401-1(d)(2)).
Exceptions & edge cases
Partnership income: A partner's distributive share of income from a partnership engaged in a trade or business is included in net earnings (26 CFR § 1.1402(a)-1(a)(2), referencing sections 704 and 702(a)(9)).
Guaranteed payments: Payments received from a partnership for services or capital (determined without regard to partnership income) are included in gross income (26 CFR § 1.1402(a)-1(b); see section 707(c)).
Real estate exclusions: Rentals from real estate and personal property leased with real estate are generally excluded unless received as a real estate dealer (26 U.S.C. § 1402(a)(1)).
Agricultural arrangements: Income from a land arrangement where the owner/tenant materially participates in production may be included in net earnings (26 U.S.C. § 1402(a)(1)).
Disregarded entities: A single-member LLC disregarded as separate from its owner is treated as a sole proprietorship; the owner is subject to self-employment tax on the LLC's activities (26 CFR § 301.7701-2(c)(2)(iv)(C)).
Estimated tax: Self-employment tax must be included in computing estimated tax under section 6015 (26 CFR § 1.1401-1(a)).
Penalties: Underpayment of estimated tax can result in an addition to tax under section 6654 (26 CFR § 1.6654-1).
Sources
- [1]U.S. National Archives, Electronic Code of Federal Regulations — 26 CFR 1.1401-1 — Tax on self-employment income · as of 2026-08-26
- [2]Office of the Law Revision Counsel, U.S. House of Representatives — United States Code (prelim) — 26 U.S.C. § 1401 — Rate of Tax (Self-Employment) · as of 2026-08-26
- [3]U.S. National Archives, Electronic Code of Federal Regulations — 26 CFR 1.1402(a)-1 — Definition of net earnings from self-employment · as of 2026-08-26
- [4]Office of the Law Revision Counsel, U.S. House of Representatives — United States Code (prelim) — 26 U.S.C. § 1402 — Definitions (Net Earnings from Self-Employment) · as of 2026-08-26
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