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Income for Self-Employment Tax

Self-employment tax is based solely on the business income reported on Schedule C of an individual’s tax return. It is 15.3 percent of the individual’s net earnings from self-employment as reported on Schedule SE and consists of two portions: 12.4 percent is for Social Security, and 2.9 percent is for Medicare. The Social Security portion of the self-employment tax is satisfied once the self-employed earner has at least $80,400 of income; however, the Medicare portion of the self-employment tax is unlimited. For an individual who has wages and is also self-employed, the tax on the wages is paid first. This rule is only relevant when the individual has total earnings over $84,900.

Inside Income for Self-Employment Tax