Schedule SE is the form that turns your freelance or business profit into a self-employment tax bill. The arithmetic is short, but the wage base, the 92.35% factor and the interaction with W-2 wages are where people go wrong.
This guide gives the rates and wage base, goes line by line through the form, and works two examples, one with no wages and one with a W-2 job. It follows the Schedule SE form and instructions, IRS Topic 554, Publication 334 and Publication 15.
You must file Schedule SE if the amount on line 4c is $400 or more, or if you had church employee income of $108.28 or more. The IRS says you usually must pay self-employment tax if you had net earnings from self-employment of $400 or more. You are self-employed for this purpose if you are a sole proprietor (including an independent contractor), a partner in a partnership (including a member of a multi-member LLC treated as a partnership) or otherwise in business for yourself. You can owe self-employment tax even if you currently receive Social Security benefits. The Social Security Administration uses the information from Schedule SE to figure your benefits.
| Part | Rate | Limit |
|---|---|---|
| Social security | 12.4% | Net earnings up to the wage base, less wages already subject to social security tax: $176,100 in 2025; $184,500 in 2026 |
| Medicare | 2.9% | No limit: all net earnings are subject to the Medicare tax |
| Total | 15.3% | |
| Additional Medicare Tax | 0.9% extra | Total of line 6 over $200,000 (single, head of household, qualifying surviving spouse), $250,000 (married filing jointly) or $125,000 (married filing separately), reduced by wages subject to it |
The 2025 wage base is from the Schedule SE instructions. The 2026 wage base of $184,500 is stated in IRS Publication 334 and Publication 15 (2026); the 2026 Schedule SE was not out when this was written. Use Form 8959 to figure the Additional Medicare Tax.
Next year (2027): the Social Security Administration's notice in the Federal Register (26 October 2026) says the contribution and benefit base will be $192,300 for self-employment income earned in tax years beginning in 2027. It does not apply to 2026 returns.
| Line | What it does |
|---|---|
| 2 | Net profit or loss from Schedule C line 31 and from Schedule K-1 (Form 1065) box 14 code A, other than farming |
| 3 | Combine lines 1a, 1b and 2 |
| 4a | Multiply line 3 by 92.35% (0.9235) |
| 4c | If less than $400, stop: you don't owe self-employment tax |
| 6 | Total net earnings subject to the tax (lines 4c and 5b) |
| 7 | Maximum for social security tax: $176,100 on the 2025 form |
| 8a to 9 | Subtract wages and tips already subject to social security tax from the maximum |
| 10 | 12.4% of the smaller of line 6 or line 9 |
| 11 | 2.9% of line 6 |
| 12 | Self-employment tax: add lines 10 and 11 |
| 13 | Deduction for one-half of self-employment tax: line 12 x 50% |
If you have two or more businesses subject to SE tax, your net earnings are the combined net earnings of all of them, and a loss in one reduces the others.
Example 1: no wages. A freelancer has $60,000 of net profit and no other earnings.
| Step | Amount |
|---|---|
| Net earnings x 92.35% (line 4a) | $55,410.00 |
| 12.4% of the smaller of line 6 or line 9 (line 10) | $6,870.84 |
| 2.9% of line 6 (line 11) | $1,606.89 |
| Self-employment tax (line 12) | $8,477.73 |
| Deduction for half (line 13) | $4,238.87 |
Example 2: wages and self-employment. Someone with $150,000 of W-2 social security wages and $80,000 of net profit, using the 2026 wage base of $184,500.
| Step | Amount |
|---|---|
| Net earnings x 92.35% (line 6) | $73,880.00 |
| Maximum less wages (line 9): $184,500 - $150,000 | $34,500 |
| 12.4% of the smaller of line 6 or line 9 (line 10) | $4,278.00 |
| 2.9% of line 6 (line 11) | $2,142.52 |
| Self-employment tax (line 12) | $6,420.52 |
| Deduction for half (line 13) | $3,210.26 |
These examples apply the 2025 form's line structure to the 2026 wage base, and ignore the Additional Medicare Tax and income tax. They are illustrations.
If you had a loss or a small amount of income from self-employment, the optional methods in Part II may give you credit toward social security coverage even though you have a loss or little income, and can help you qualify for credits that depend on earned income when your net earnings are below $7,240. Church employees and ministers have special rules, and residents of U.S. territories file Schedule SE with Form 1040-SS. For the income side of a business see our freelancer tax guide and self-employment deductions guide.
Instructions for Schedule SE (Form 1040) (2025), Schedule SE (Form 1040) 2025, IRS Topic no. 554: Self-employment tax, IRS Publication 334, IRS Publication 15 (2026).