Self-Employment Tax 2025: What It Is and How to Calculate It

These figures apply to the 2025 tax year — income you earned in 2025 and report when you file in early 2026.

Jordan Lee earned $6,200 on Fiverr in his senior year of college. He filed taxes in March, same as always — imported his W-2 from his campus library job, clicked through the questions, reached the review screen.

$876 extra. Tax software labeled it "self-employment tax."

He read it twice. A student. Part-time freelancer. He called his accountant, who explained it in about ten minutes: when there's no employer, you pay both sides of Social Security and Medicare yourself. The $876 wasn't a glitch. It was his bill.

Jordan's situation reflects what many first-time gig workers discover at tax time. Details are illustrative.

Self-employment tax is 15.3%. That's the number every gig worker needs to know — and it hits before income tax even enters the picture.

If you made $20,000 on DoorDash, Etsy, Fiverr, or any other platform last year, you're looking at roughly $2,800 in self-employment tax alone. Most first-time filers don't see it coming. Here's exactly what it is, how to calculate it, and how to legally reduce it.

What Is Self-Employment Tax?

When you work a regular job, your employer pays half of your Social Security and Medicare taxes. You pay the other half — and it's automatically withheld from your paycheck.

When you're self-employed, there's no employer. So you pay both halves yourself.

That's what self-employment tax is: the combined employer + employee share of Social Security and Medicare taxes.

For 2025, Social Security tax only applies to the first $176,100 of earnings. If you make more than that across all income sources, the 12.4% Social Security portion stops — but the 2.9% Medicare portion continues with no cap.

High earners (over $200,000 single / $250,000 married filing jointly) also pay an additional 0.9% Medicare surtax on the excess. Most gig workers don't hit this threshold.

IRS source: Self-Employment Tax (Social Security and Medicare Taxes)

Who Has to Pay Self-Employment Tax?

You owe SE tax if your net self-employment income is $400 or more for the year. This applies regardless of whether you received a 1099 form.

Common situations that trigger SE tax:

• DoorDash, Uber Eats, Instacart, or any delivery platform
• Etsy, Poshmark, eBay selling (if treated as a business, not hobby)
• Fiverr, Upwork, or any freelance work
• Airbnb or short-term rental income reported on Schedule C
• Any side hustle where you're paid as a contractor (no taxes withheld)

The $400 threshold is net profit — after deductions. If you earned $1,000 but had $650 in deductible mileage and expenses, your net is $350, which falls below the threshold.

How to Calculate Self-Employment Tax: Step by Step

The IRS doesn't apply the 15.3% rate to your full earnings. There's a built-in adjustment that reduces the taxable base slightly.

Step 1: Find your net profit

Net profit = gross self-employment income minus business deductions (mileage, phone, equipment, etc.)

Example: $25,000 DoorDash earnings − $8,000 mileage deduction − $960 phone = $16,040 net profit

Step 2: Multiply by 92.35%

The IRS lets you exclude 7.65% of net profit before calculating SE tax. This offsets the fact that employees don't pay SE tax on their employer's half.

$16,040 × 92.35% = $14,813

Step 3: Multiply by 15.3%

$14,813 × 15.3% = $2,266 SE tax owed

Quick reference table:

The SE Tax Deduction: How to Get Half Back

After calculating your SE tax, you can deduct 50% of it from your gross income. This happens on Schedule 1 of Form 1040, before your taxable income is calculated.

Example: $2,266 SE tax × 50% = $1,133 deduction

This deduction lowers your adjusted gross income (AGI), which reduces your income tax bill. It doesn't reduce SE tax itself — but it partially offsets the burden.

On $20,000 in net DoorDash profit:

• SE Tax: $2,826
• SE Tax deduction: $1,413 off your AGI
• Income tax savings from deduction (at 12% bracket): ~$170

How SE Tax Interacts With Income Tax

SE tax and income tax are two separate calculations. Both apply to your self-employment income.

SE tax is calculated first on Schedule SE. Then your net self-employment profit (minus the 50% SE deduction) gets added to any other income you have and taxed at your regular income tax rate.

Example: Gig worker with $20,000 DoorDash income, no other income, single filer, standard deduction ($15,000):

If you also have a W-2 job, your DoorDash income stacks on top of your salary. That can push you into a higher income tax bracket on the DoorDash portion, but SE tax stays the same regardless.

How to Reduce Self-Employment Tax

SE tax is calculated on net profit — so every dollar in legitimate deductions reduces both your income tax and your SE tax bill.

Deductions that reduce SE tax:

The SEP-IRA is especially powerful for freelancers and higher earners. Contributing $5,000 to a SEP-IRA doesn't just reduce income tax — it lowers the net profit that SE tax is calculated on, saving you $5,000 × 15.3% × 92.35% = roughly $706 in SE tax on top of income tax savings.

IRS source: Publication 535 — Business Expenses

Do You Pay SE Tax Every Quarter?

If you expect to owe $1,000 or more in total taxes for the year (SE tax + income tax combined), the IRS expects quarterly estimated payments — not one annual payment at filing.

2024 quarterly deadlines:

A practical approach: set aside 25–30% of every gig payment. When quarterly deadlines arrive, pay what you've set aside.

Jordan started doing exactly that after his first filing — 27% of every Fiverr payment, moved automatically to a savings account he named "Not My Money." If you're on track to owe less than $1,000 total for the year, you can wait until filing.

For more detail on calculating and paying quarterly, see the quarterly estimated taxes guide for gig workers.

How to File: Schedule SE

SE tax is reported on Schedule SE, which you attach to your Form 1040.

1. Complete Schedule C first (report income, subtract deductions, find net profit)
2. Transfer net profit to Schedule SE
3. Schedule SE calculates your SE tax automatically
4. The SE tax flows to Form 1040, Schedule 2
5. The 50% SE deduction flows to Form 1040, Schedule 1

Most tax software handles this automatically once you enter your 1099-NEC or manually report your income. You don't need to do the math by hand.

Frequently Asked Questions

Is self-employment tax the same as income tax?

No — they're two separate taxes. Self-employment tax (15.3%) covers Social Security and Medicare. Income tax is calculated separately based on your tax bracket. Most gig workers pay both on the same self-employment income.

Do I owe SE tax if I made less than $600?

The threshold for SE tax is $400 in net profit — not $600. The $600 figure is when platforms send a 1099-NEC. Even if you don't receive a 1099, you still owe SE tax if your net profit exceeds $400.

Does SE tax apply if I have a regular job too?

Yes. SE tax applies to self-employment income regardless of other income. Your W-2 wages are subject to FICA (which your employer splits with you), and your 1099 income is subject to SE tax separately. There's no overlap — you pay both on their respective income sources.

Can I avoid SE tax by forming an LLC?

A single-member LLC is a "disregarded entity" by default — it's taxed the same as a sole proprietor. You still pay SE tax. To reduce SE tax through an LLC, you'd need to elect S-Corp status and pay yourself a reasonable salary, which comes with additional complexity and filing requirements. For most gig workers earning under $40,000, the cost of S-Corp compliance outweighs the SE tax savings.

What if I have multiple 1099 gigs?

All net self-employment income from all sources gets combined on Schedule SE. If you made $8,000 on DoorDash and $6,000 on Fiverr, Schedule SE treats it as $14,000 total (minus combined deductions). You don't file separate Schedule SEs for each gig.

Jordan graduated and kept freelancing full-time. His SE tax bill the following year was $1,800 — but this time, the money was already sitting in that savings account. "It's just not a surprise anymore," he says.

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Related Guides

• DoorDash Taxes 2024: How Much You Owe and How to File
• Quarterly Estimated Taxes for Gig Workers: How Much and When to Pay
• What Is Schedule C? A Plain-English Guide for Gig Workers
• Gig Worker Tax Deductions: The Complete 2024 List

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This article is for informational purposes only and does not constitute tax advice. Tax laws change frequently and vary by state. Consult a qualified tax professional for guidance specific to your situation.