Is there an income limit on self-employment tax in 2026?

The 12.4% Social Security portion applies only to the first $184,500 of net earnings in 2026. The 2.9% Medicare portion has no cap, and earnings over $200,000 single ($250,000 married filing jointly) owe an extra 0.9% Medicare tax.

Why is the rate applied to 92.35% instead of 100%?

The 92.35% factor mirrors how W-2 employees are treated: they pay FICA only on wages, not on the employer's matching share. Multiplying by 92.35% gives the self-employed the equivalent treatment.

At what income does an S-corp election beat paying self-employment tax?

There is no single threshold, but the S-corp election starts to make sense when your profit is high enough that the payroll tax savings on distributions exceed the cost of running payroll and filing a corporate return. Run your own numbers before electing.

How Much Is Self-Employment Tax on 1099 Income? The 2026 Rate

Q: How much is self-employment tax on 1099 income?

15.3% of 92.35% of your net earnings. That is 12.4% for Social Security plus 2.9% for Medicare. On $80,000 of net 1099 profit in 2026, the tax is $11,304, before any income tax.

Q: Can you deduct self-employment tax?

You can deduct half of your self-employment tax from your income on your tax return. It lowers your income tax, but it does not reduce the self-employment tax itself.

Guides · Updated October 2026

$80,000 of 1099 profit. $11,304 of self-employment tax. Before a single dollar of income tax. If you are skimming, that is the number that blindsides new contractors every April, and everything below is the machinery behind it. I do not think the rate itself is the problem. The problem is that W-2 workers never see half of it, because their employer pays the other half invisibly, so the first year of 1099 income feels like a tax hike. It is not a hike. It is the same tax, finally visible.

The 2026 rate, in two parts

Self-employment tax is 15.3%, and it is really two taxes wearing one name. The Social Security portion is 12.4%, applied to the first $184,500 of net earnings in 2026. The Medicare portion is 2.9%, applied to every dollar with no cap. Very high earners pay an extra 0.9% Medicare tax above $200,000 single or $250,000 married filing jointly, which brings their Medicare rate to 3.8% on the top slice.

Now the part that confuses everyone: the 15.3% does not apply to your full net profit. It applies to 92.35% of it. That odd number exists so the self-employed get the same deal W-2 employees get. Employees pay FICA on their wages, not on their employer's matching contribution. The 92.35% factor, which is just 100% minus 7.65%, mirrors that treatment. Multiply your net profit by 0.9235, and that is the figure the 15.3% hits.

Worked example: $80,000 net 1099 profit

	Amount
Net profit	$80,000
SE taxable earnings (x 92.35%)	$73,880
Social Security (12.4%)	$9,161
Medicare (2.9%)	$2,143
Total self-employment tax	$11,304

You also get to deduct half of that $11,304, which is $5,652, from your income on your tax return. It lowers your income tax bill. It does not lower the self-employment tax itself, which trips people up every year.

The decision rules that actually matter

If your net earnings are under the $184,500 Social Security wage base, the math is one line: net profit times 0.9235 times 15.3%. That covers the large majority of freelancers and contractors. If you are above the wage base, split the calculation: 12.4% on the first $184,500 of SE earnings, 2.9% on everything, plus the 0.9% kicker above the high-earner thresholds.

The more interesting decision is the S-corp line. As an S-corp owner, you pay employment taxes only on your W-2 salary, not on distributions. That can save real money at higher profits, but it costs you payroll administration and a corporate tax return. My opinion: below about $60,000 to $80,000 of profit, the paperwork usually eats the savings. Above that, run the comparison properly instead of guessing. There is no magic threshold where it flips; it depends on what you would pay yourself as salary.

And the threshold that catches side hustlers: you owe self-employment tax once your net earnings from self-employment reach $400 in a year. Not $4,000. Four hundred dollars. The side project that netted $900 still files Schedule SE.

The fix for the April surprise. The rate is not negotiable, but the timing is. If you expect to owe $1,000 or more, the IRS wants quarterly estimated payments: April, June, September, January. Four smaller payments beat one brutal one, and they beat the underpayment penalty too.

Compare 1099 pay against a W-2 offer

See the full tax picture, self-employment tax included, side by side.

Run your own numbers with the free calculator

Frequently asked questions

How much is self-employment tax on 1099 income?

15.3% of 92.35% of your net earnings: 12.4% for Social Security plus 2.9% for Medicare. On $80,000 of net 1099 profit in 2026, that is $11,304, before any income tax.

Is there an income cap in 2026?

The 12.4% Social Security portion applies to the first $184,500 of net earnings. The 2.9% Medicare portion has no cap. Earnings above $200,000 single or $250,000 married filing jointly add a 0.9% Medicare tax.

Why 92.35% instead of the full profit?

It mirrors W-2 treatment: employees pay FICA on wages, not on the employer's matching share. The factor is 100% minus 7.65%, the employer-equivalent half.

Can I deduct self-employment tax?

You can deduct half of it from your income on your tax return, which lowers your income tax. It does not reduce the self-employment tax itself.

Does an S-corp election avoid self-employment tax?

S-corp owners pay employment taxes on their W-2 salary but not on distributions, which can save money at higher profits. The tradeoff is payroll administration and a corporate return, so run your own numbers before electing.

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