Social Security for the Self-Employed — SE Tax
Self-employed workers pay both the employee and employer share of Social Security and Medicare tax (15.3% on net earnings) and earn full benefit credits.
Official source: ssa.gov
## The SE tax breakdown
Self-employed workers pay Self-Employment (SE) tax instead of having FICA withheld by an employer. The rate is:
- **12.4%** for Social Security, on net self-employment earnings up to the **annual taxable wage base** ($176,100 in 2026). - **2.9%** for Medicare, with **no income cap**. - **Total: 15.3%** on net earnings.
High earners also pay an extra **0.9% Additional Medicare Tax** on earnings above $200,000 (single) / $250,000 (married filing jointly).
## You get a partial deduction
When you calculate your federal income tax, you can deduct **one half of your SE tax** from your adjusted gross income. This roughly offsets the "employer half" you are paying.
## Earning Social Security credits
You earn Social Security work credits the same way wage workers do:
- **$1,890 per credit in 2026**, up to 4 credits per year ($7,560). - Self-employment earnings count toward credits as long as you file Schedule SE.
## The temptation that hurts you later
Some self-employed workers report low income to cut SE tax. Doing this also:
- Lowers future SSDI and retirement benefits (because your average indexed monthly earnings drop). - Can leave you short on work credits when you need them. - Can disqualify you from SSDI entirely if your DLI (Date Last Insured) expires.
## What to file
- **Schedule C** (or Schedule F for farming) for net business profit. - **Schedule SE** to calculate SE tax. - Pay estimated taxes quarterly (Form 1040-ES) to avoid penalties.
## Tip for solo workers
Track every receipt. Legitimate business deductions lower SE tax, but be careful not to under-report — the long-term cost in lost benefits can outweigh short-term tax savings.
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Frequently asked questions about Social Security for the Self-Employed
Do gig workers pay Social Security tax?+
Yes. If your net self-employment earnings are $400 or more for the year, you owe SE tax and report it on Schedule SE.
How many credits do I need for SSDI?+
Generally 40 credits (the same as retirement), with 20 earned in the 10 years before your disability. Younger workers need fewer credits.
Is there a Social Security cap for self-employed people?+
Yes. Only earnings up to the taxable wage base ($176,100 in 2026) are subject to the 12.4% Social Security portion. The 2.9% Medicare portion has no cap.
Can I deduct any of the SE tax?+
Yes. You can deduct one-half of your SE tax from your adjusted gross income on your federal return.
What is the Date Last Insured (DLI)?+
Your DLI is the last date you are still eligible for SSDI based on recent work credits. Underreporting income can move your DLI earlier than expected.
Source: ssa.gov