The 15.3% tax most gig workers don't see coming — calculated precisely, with every deduction applied. Know your exact bill before it arrives.
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Self-employment tax (SE tax) is a 15.3% tax on net self-employment income that covers Social Security (12.4%) and Medicare (2.9%). If you earn money through DoorDash, Uber, Instacart, freelancing, or any other self-employed work, you owe SE tax on those earnings — in addition to regular income tax.
The reason gig workers pay this at a higher rate than traditional employees comes down to how Social Security and Medicare are normally funded. For W-2 employees, the employer pays half (7.65%) and the employee pays the other half (7.65%). As a self-employed worker, you're both the employee and the employer — so you pay the full 15.3%.
The IRS doesn't apply SE tax to 100% of your net self-employment income. Instead, it applies it to 92.35% of net income. This adjustment accounts for the fact that the employer half of SE tax is considered a business expense. In practice, this means your effective SE tax rate on gross net income is about 14.1%, not 15.3%.
After calculating your SE tax, the IRS allows you to deduct 50% of it from your gross income before calculating your income tax. This deduction exists because W-2 employees get the employer's half of FICA paid on their behalf — the deduction gives self-employed workers a similar adjustment. This calculator applies this deduction automatically.
The 12.4% Social Security portion of SE tax only applies to the first $168,600 of net SE income in 2026. Income above that threshold is only subject to the 2.9% Medicare portion. For the vast majority of gig workers, total income will fall well below this cap — but it's worth knowing if you have a high-income year.
You owe SE tax on net self-employment income above $400. So if you earned $500 from DoorDash and had $150 in expenses, your net SE income is $350 — below the $400 threshold, so no SE tax is owed (though you still need to file a return if your total income exceeds the filing threshold). Even small amounts of gig income can trigger SE tax quickly once expenses are factored in.
No — they are two separate taxes. SE tax (15.3%) covers Social Security and Medicare. Federal income tax (10–37%) covers government operations and programs. Gig workers owe both. SE tax is calculated first on your net SE income, then half of it is deducted before calculating income tax. Both are reported on your annual Form 1040.
W-2 employees pay 7.65% in FICA (Social Security + Medicare) taxes, and their employer matches that with another 7.65% — for a combined total of 15.3%. Self-employed workers pay the full 15.3% themselves, but they get to deduct half of it from their income tax — making the real after-deduction cost slightly lower than it appears at first.
Yes. SE tax payments count toward your Social Security earnings record, which determines your future Social Security retirement benefits. The more SE tax you pay over your working life, the higher your eventual Social Security benefit (up to the annual cap). Medicare contributions from SE tax also make you eligible for Medicare at age 65. This is one often-overlooked benefit of paying SE tax faithfully.
SE tax is calculated on Schedule SE (Form 1040) and the result flows into your Form 1040. You report your self-employment income and expenses on Schedule C first, then Schedule SE uses your net profit to calculate the SE tax. You don't file these separately — they're all part of your annual tax return. For quarterly estimated payments, you pay your combined income tax and SE tax together using Form 1040-ES.