Self-Employment Tax Explained for Gig Workers

By Alex Marcel · Updated April 10, 2026

What Self-Employment Tax Actually Is

When you work a regular job, your employer pays 7.65% of your wages toward Social Security and Medicare and withholds another 7.65% from your paycheck. You see the withholding line on your stub; you don’t see the employer’s share because it never appears in your pay.

When you’re self-employed (delivering for DoorDash, shopping for Instacart, driving for Uber), there’s no employer. You pay both halves. That’s where 15.3% comes from: the 7.65% that would have been withheld from a paycheck, plus the 7.65% an employer would have paid separately.

The breakdown:

Social Security: 12.4% (on net earnings up to the annual wage base)
Medicare: 2.9% (no cap)
Total: 15.3%

This is a separate tax from income tax. Both apply to your gig earnings.

How It’s Calculated

SE tax doesn’t apply to your gross gig income. It applies to your net self-employment income (i.e. what’s left after business deductions). Mileage, phone, supplies, and other legitimate expenses reduce your net income before SE tax is calculated. Every dollar deducted saves you about 14 cents in SE tax.

From net income, there’s one more step: multiply by 92.35% before applying the 15.3% rate. This factor exists because employees don’t pay SE tax on the portion their employer covers. The IRS builds in an equivalent adjustment for self-employed workers. Tax software handles this automatically; you don’t calculate it manually.

The formula:

Net self-employment income × 92.35% × 15.3% = SE tax owed

Example:

$35,000 net profit after deductions:

$35,000 × 92.35% = $32,322.50
$32,322.50 × 15.3% = $4,945 in SE tax

That’s before income tax.

What You Can Deduct

Half of SE Tax

Once you calculate your SE tax, you can deduct half of it as an adjustment to income on Form 1040. This reduces your taxable income for income tax purposes. It doesn’t lower the SE tax itself.

Using the example above: $4,945 ÷ 2 = $2,472 deductible. In the 22% income tax bracket, that saves about $544 in income tax. It may not be transformative, but at least it’s automatic. Tax software applies it when you complete Schedule SE.

Business Deductions

Every dollar of business expenses reduces the net income SE tax is calculated on. Mileage is usually the largest deduction. At the 2026 IRS rate of $0.725 per mile, 15,000 business miles deducts $10,875 from gross income. At an effective SE tax rate of roughly 14%, that’s about $1,523 in SE tax saved.

For the full list of deductions beyond mileage, see our guide to tax deductions gig workers overlook.

The QBI Deduction

Through 2025, self-employed workers could generally deduct up to 20% of qualified business income under the Tax Cuts and Jobs Act’s Section 199A provision. Whether this deduction applies to your 2026 taxes depends on whether Congress extended it. The original provision was set to expire after 2025. Verify the current status at IRS.gov or with a tax professional before filing.

What SE Tax Costs at Different Income Levels

Here’s what SE tax alone looks like across a range of net incomes, before income tax:

Net Self-Employment Income	SE Tax (approx.)
$15,000	~$2,120
$25,000	~$3,532
$35,000	~$4,945
$50,000	~$7,065
$75,000	~$10,597

These figures use the 15.3% × 92.35% formula. Income tax is additional and depends on your total income, filing status, and deductions.

What This Means for How You Pay

Gig workers don’t have employer withholding. Nobody is pulling SE tax out of your DoorDash deposits or Instacart batch payments. The IRS expects you to send payments four times a year. If you wait until April and pay everything at once, you’ll likely owe an underpayment penalty on top of the taxes.

For how quarterly payments work, due dates, and how to calculate what to send, see our guide to quarterly estimated taxes for gig workers.

The short version: set aside 25 to 30 percent of net gig earnings as you go. That buffer covers SE tax plus federal income tax for most gig workers in the middle income ranges, assuming the standard deduction and normal deductions.

One Number Worth Internalizing

The effective SE tax rate on net profit, after the 92.35% adjustment, is approximately 14.13%. Keep that number handy when you’re estimating what a good month costs you. On $4,000 in net gig earnings, that’s roughly $565 in SE tax. Building it into your mental accounting is more useful than being surprised by it in April.

Frequently Asked Questions

What is self-employment tax?

Self-employment tax is the 15.3% tax gig workers pay to fund Social Security (12.4%) and Medicare (2.9%). Employees split this cost with their employer; each pays 7.65%. As a self-employed worker, you pay both halves. SE tax is separate from income tax and applies on top of it. You calculate it on Schedule SE and report it on Form 1040.

How is self-employment tax calculated?

SE tax applies to your net self-employment income (gross earnings minus business deductions) multiplied by 92.35%, then multiplied by 15.3%. The 92.35% factor approximates the adjustment employees receive because they don't pay the employer's share. Example: $35,000 net income × 92.35% = $32,323 × 15.3% = approximately $4,945 in SE tax.

Can I deduct self-employment tax?

You can deduct half of your SE tax as an adjustment to gross income on Form 1040. This reduces your taxable income for income tax purposes. It doesn't reduce the SE tax itself. On a $5,000 SE tax bill, you deduct $2,500 from gross income, saving roughly $550 in income tax if you're in the 22% bracket.

Do I owe SE tax on small amounts of gig income?

SE tax applies once your net self-employment income reaches $400 or more for the year. Below $400, no SE tax is owed. Above that threshold, it applies to all net self-employment income. There's no standard deduction equivalent that reduces the SE tax base the way it reduces income tax.

What's the Social Security wage base?

The 12.4% Social Security portion of SE tax applies only up to an annual wage base, which the Social Security Administration adjusts each year. Most part-time and full-time gig workers won't approach the cap. The 2.9% Medicare portion has no cap, and high earners above $200,000 owe an additional 0.9% Medicare surtax.

Is SE tax the same as income tax?

No. They're two separate taxes. SE tax funds Social Security and Medicare at a flat 15.3% (below the SS wage base). Income tax is calculated at progressive rates on your total taxable income. On $35,000 in net gig earnings, you could owe approximately $5,000 in SE tax before any income tax is calculated.

Alex Marcel

Alex Marcel has driven for DoorDash, Grubhub, and other gig platforms. He covers car insurance, health coverage, and taxes for independent contractors at GigWorkerHQ.