What this calculator does
It applies both taxes in the order the IRS applies them, which is the part most estimates get wrong. Self-employment tax is worked out first, on 92.35% of your profit. Half of that tax is then deducted, the 20% business income deduction is taken on what remains, and income tax is charged at your marginal rate on what is left after both. Subtracting the two taxes from profit gives the figure you keep.
The input that separates this from most calculators is the salary field. Social Security tax stops at a wage base, and wages from a job count towards it, so a well-paid employee with a side business pays a much lower rate on that side income than somebody earning the same amount with no job. Almost nothing online asks the question.
What each input means
- Side income for the year. Everything the work brought in before expenses, whether or not a 1099 arrived for it.
- Business expenses. Only costs the work required. An expense reduces both taxes, which is why a dollar of legitimate expense is worth more than a dollar of deduction against income tax alone.
- Salary from a job. Wages already subject to Social Security this year. Once these reach $184,500, side income owes Medicare only.
- Income tax bracket. Your marginal rate, since side income sits on top of your other income.
- Business income deduction. Leave it ticked if you are an ordinary sole trader below the income limits. Untick it if your situation is one the deduction restricts.
Worked example
$12,000 billed with $2,000 of expenses, at a 22% marginal rate, with no salary using up the wage base:
- Net profit: $10,000.
- Net earnings for self-employment tax: $9,235, being 92.35% of profit.
- Self-employment tax: $1,412.96, split $1,145.14 Social Security and $267.82 Medicare.
- Deductions: $706.48 for half the SE tax, then $1,858.70 of business income.
- Income tax at 22% on the remaining $7,434.82: $1,635.66.
- Kept: $6,951.39, an effective rate of 30.5%, or about 70 cents on the dollar.
Now add a $184,500 salary and nothing else changes except that Social Security has already been paid in full for the year. Self-employment tax falls from $1,412.96 to $267.82, and the amount kept rises to roughly $7,996. Identical work, identical invoices, about $1,045 difference.
A note on which tax is larger
Self-employment tax is often described as the bigger of the two, and that depends on your bracket. Income tax is charged on roughly 74% of profit after both deductions, while self-employment tax is charged on 92.35% of it, so the crossover sits near a 19% marginal rate. In the 12% bracket the tax most people have never heard of costs more than the one they were expecting. At 22% and above, income tax is larger.
Frequently asked questions
What is the self-employment tax rate for 2026?
15.3%, being 12.4% for Social Security and 2.9% for Medicare. It is charged on 92.35% of your net profit rather than all of it, so the effective rate on profit is closer to 14.1% before any deductions are applied.
Why is it 15.3% when my payslip only shows 7.65%?
Because an employer pays the matching 7.65% on your behalf, which never appears on your payslip. Working for yourself makes you both parties, so you owe both halves. Half of what you pay is then deductible against income tax, which is the system acknowledging that the employer half was never really your income.
At what income does self-employment tax start?
$400 of net earnings, which is 92.35% of profit. It is a threshold rather than an allowance: crossing it makes the whole amount liable, not just the part above $400.
Does a salary from a job change what I owe on side income?
Substantially. Social Security stops once your combined earnings for the year pass the wage base, which is $184,500 for 2026, and wages count towards it. If your salary has already used it up, side income owes only the 2.9% Medicare portion. Enter your salary in the calculator and watch the answer move.
What is the 20% qualified business income deduction?
A deduction of up to 20% of qualified business income, taken after the self-employment tax deduction and before income tax is worked out. Most ordinary sole traders below the income limits qualify. The full rules involve income thresholds and business types, and specified service businesses at higher incomes are limited or excluded, so the checkbox lets you turn it off.
Does this include state tax?
No. Everything here is federal. State income tax comes off on top, and a few cities add their own, so the amount you keep will be lower than shown wherever state tax applies.
Which tax bracket should I enter?
Your marginal rate, meaning the highest rate your income reaches, not your average rate. Side income stacks on top of everything else you earn, so it is taxed at the top of your range rather than from the bottom up.
Read more
The full guide to this, including what you can deduct and how much to set aside from each payment, is in side hustle taxes. For when the tax is due rather than how much it is, see quarterly estimated taxes, and for sheltering the profit, Solo 401(k) or SEP IRA.
A planning estimate for federal tax only, not tax advice. State and local taxes are not included, and an unusual situation may need an accountant rather than a calculator.