How the Self-Employment Tax Calculator works

The formula

Step by step

1. Net earnings from self-employment = net profit × 92.35%. That factor mirrors the fact that an employer's half of FICA is not itself taxed as wages, so the 15.3% is charged on a smaller base than the profit.
2. Social Security at 12.4%, but only on the part of net earnings still under the annual wage base. W-2 wages from a job CONSUME THAT BASE FIRST — a detail that removes the 12.4% entirely for many people with a day job plus a side business.
3. Medicare at 2.9% with no cap, plus the 0.9% Additional Medicare surtax on combined wages and net earnings above the statutory threshold.
4. Half of SE tax is deducted above the line before computing income tax on the profit, so it applies whether or not you itemize.
5. The quarterly figure is the total federal liability on the profit divided by four; the safe-harbor rule (90% of this year, or 100%/110% of last year) is what actually avoids an underpayment penalty.

Assumptions & limitations

• Sole proprietor or single-member LLC filing Schedule C. An S-corp election splits income into salary and distributions and changes the answer substantially — not modeled.
• Federal only. State income tax on business profit is separate and varies by state.
• No QBI (Section 199A) deduction, business credits, retirement-plan contributions, or self-employed health insurance deduction — each of which can reduce the income-tax layer.