How Much Is SECA Tax? Rates, Caps, and the Medicare Surtax

The self-employment tax rate is 15.3% of your net self-employment earnings: 12.4% for Social Security and 2.9% for Medicare.¹ That headline number is where every calculation starts, but it is rarely the whole bill. The Social Security portion stops at an annual earnings cap, the Medicare portion never stops, and higher earners pay an extra 0.9% on top. A separate income tax deduction softens the sting.

What the 15.3% Actually Applies To

You don’t pay 15.3% on your gross revenue, and you don’t pay it on your full net profit either. First you subtract your business expenses to get net profit. Then you multiply that net profit by 92.35% to get your taxable self-employment income.²

The 92.35% figure is 100% minus 7.65%, the employer-equivalent share. In a regular job, the employer’s half of payroll taxes isn’t treated as the employee’s income, and this adjustment gives self-employed workers the same treatment. On a $100,000 net profit, self-employment tax applies to $92,350.

There’s a floor. If your net self-employment earnings come in below $400 for the year, you owe no self-employment tax and don’t file Schedule SE.² The $400 threshold is written into the statute and doesn’t adjust for inflation.

The Social Security Cap and the Uncapped Medicare Portion

The 12.4% Social Security piece only applies up to an annual earnings cap. For 2026, that cap is $184,500.³ Once your taxable self-employment income passes it, the 12.4% stops. The Social Security Administration resets the figure each year based on national average wages.

The 2.9% Medicare piece has no cap. Every dollar of taxable self-employment income is subject to it.⁴

A worked example makes this concrete. A consultant with $250,000 in net self-employment income has a taxable base of $230,875 after the 92.35% adjustment. The 12.4% Social Security tax applies to the first $184,500 of that, or $22,878. The 2.9% Medicare tax applies to the full $230,875, or $6,695. Total self-employment tax before any surcharge: about $29,573.

If You Also Earn W-2 Wages

W-2 wages count against the Social Security cap first. Whatever room is left under $184,500 is what your self-employment income runs through at 12.4%.⁵

Say your 2026 W-2 wages are $150,000 and your net self-employment income after the 92.35% adjustment is $80,000. The cap has $34,500 of room left, so only $34,500 of your self-employment income gets the 12.4% Social Security rate. The 2.9% Medicare tax still hits the entire $80,000. If your W-2 wages by themselves reach or exceed $184,500, you owe no Social Security tax on the self-employment side at all, but the Medicare portion still applies to every dollar.

The 0.9% Additional Medicare Tax

Higher earners pay an extra 0.9% Medicare surcharge on income above these thresholds:¹

Single or head of household: $200,000
Married filing jointly: $250,000
Married filing separately: $125,000

Above the threshold, your effective Medicare rate on self-employment income moves from 2.9% to 3.8%. The thresholds are statutory and don’t adjust for inflation. You calculate the surcharge on Form 8959.⁶

One trap: W-2 wages and self-employment income are combined for this test. An employer only starts withholding the extra 0.9% once wages from that single job pass $200,000, so if you have both wages and self-employment income, the combined figure on your return can produce a balance due you weren’t expecting.

The 50% Income Tax Deduction

You can deduct half of your self-employment tax when figuring your federal income tax.⁷ The deduction covers the employer-equivalent share and mirrors the fact that an employer’s payroll tax contributions aren’t taxed as employee income.

It’s an above-the-line adjustment claimed on Schedule 1 of Form 1040, so it reduces your adjusted gross income whether you itemize or take the standard deduction. Lowering AGI can also help you qualify for other tax breaks that phase out at higher incomes. But note two limits. The deduction only reduces income tax; it does not reduce the self-employment tax itself. And it doesn’t cover the 0.9% Additional Medicare Tax, which the statute specifically carves out.⁷

Paying It: Quarterly Estimated Taxes

Self-employed workers pay in four installments through the year. The 2026 deadlines:⁸

First quarter: April 15, 2026
Second quarter: June 15, 2026
Third quarter: September 15, 2026
Fourth quarter: January 15, 2027

You can skip the January 15 payment if you file your 2026 return by February 1, 2027 and pay the full balance with it.⁸ Each estimated payment covers both your income tax and your self-employment tax together.

Underpay and the IRS charges a penalty based on how much you were short and how long it stayed short, using the quarterly interest rate. For the first quarter of 2026, that rate is 7% per year, compounded daily.⁹ Two safe harbors let you avoid the penalty: pay at least 90% of the current year’s tax liability, or pay at least 100% of the prior year’s total tax. The prior-year figure rises to 110% if your prior-year AGI exceeded $150,000, or $75,000 if married filing separately.⁸

First-year freelancers get caught most often, because there’s no prior-year self-employment tax to anchor to and income tends to be uneven. Estimate on the conservative side, use the Form 1040-ES worksheets, and recheck each quarter as the year’s actual numbers come in.

1
Office of the Law Revision Counsel. 26 USC 1401 Rate of Tax
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Office of the Law Revision Counsel. 26 USC 1402 Definitions
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Social Security Administration. Contribution and Benefit Base
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Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates
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Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
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Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
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Office of the Law Revision Counsel. 26 USC 164 Taxes – Section: Deduction for One-Half of Self-Employment Taxes
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IRS.gov. Form 1040-ES Estimated Tax for Individuals
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Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026