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Overview of Self-Employment Taxes

Primarily paid by individuals who work for themselves, self-employment (SE) tax consists of a social security tax and Medicare tax. SE tax payments contribute to an individual's coverage under the social security system---which provides certain retirement benefits, disability benefits, and survivor benefits---and help support Medicare, the national health insurance program that primarily provides health insurance coverage to individuals aged 65 and older.

Self-Employment Tax Rate

For 2023, the SE tax rate is 15.3%, which consists of a 12.4% tax for social security and a 2.9% tax for Medicare. The social security tax applies to an individual's first $160,200 of combined wages, tips, and net earnings. The Medicare tax applies to all of an individual's combined wages, tips, and net earnings. To obtain a general estimate of your self-employment tax liability, use Get It Back Campaign's free calculator.

Am I Required to Pay Self-Employment Tax?

Generally, you must pay SE tax and file Schedule SE (Form 1040) if either of the following applies.

  • If your net earnings from self-employment were $400 or more; or

  • If you work for a church or a qualified church-controlled organization (other than as a minister or member of a religious order) that elected an exemption from social security and Medicare taxes, you are subject to SE tax if you receive $108.28 or more in wages from the church or organization.

You Must Submit Estimated Tax Payments

Because self-employed individuals are not subject to the automatic payroll tax withholding that applies to ordinary employees, they generally need to make estimated tax payments to the IRS on a quarterly basis to avoid any penalties and/or interest. To learn more about how and when to make estimated tax payments, review the following MTR article: Some taxpayers may be required to make estimated tax payments periodically to the IRS.

For additional information generally, see the IRS's Self-Employment Tax page.

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