US Self-Employment Tax Calculator 2026

The self-employment tax rate is 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare. It is charged on 92.35% of your net profit rather than the whole figure. The Social Security element stops once your combined wages and net earnings reach the 2026 taxable maximum of $184,500, while the Medicare element continues on every dollar.

The taxable maximum for 2026 is $184,500, up from $176,100 in 2025. Above that ceiling you stop paying the 12.4% Social Security portion, so the marginal rate on further profit falls from 15.3% to 2.9%, plus the 0.9% surtax if your income is high enough.

An employee and their employer each pay half of the Social Security and Medicare cost, and the employer half is deductible for the business. To put the self-employed on a comparable footing, the rules charge the tax on 92.35% of net profit, which is the equivalent of removing the employer share before applying the rate. This calculator applies the reduction automatically.

Yes, in principle. The IRS confirms that the rules for paying self-employment tax are generally the same whether you live in the United States or abroad, because the charge follows your citizenship rather than your location. The single most important exception is a totalization agreement, which can move you out of the US system entirely.

No, and this is the most expensive misunderstanding we see. The exclusion reduces your regular income tax but not your self-employment tax, and you must take all of your self-employment income into account when figuring net earnings even where the income has been excluded. An American abroad can therefore owe no income tax at all yet still face a five-figure self-employment tax bill.

A totalization agreement is a social security treaty that stops the same work being taxed by two countries. It ensures social security taxes, including self-employment tax, are paid to only one country. Where the agreement assigns you to the other country’s system, your US self-employment tax is eliminated rather than merely reduced, which is a far better outcome than any credit.

Usually yes. A self-employed person is generally covered by the social security system of the country where they live and work, so a US citizen running an unincorporated business in the United Kingdom is normally within National Insurance rather than the US system. You must be able to evidence it, which in practice means obtaining a certificate of coverage and keeping your UK contributions up to date.

You request a certificate of coverage from the social security agency of the country whose system covers you, and attach a photocopy of that certificate to your Form 1040 for each year you are claiming the exemption. Without the certificate the IRS has no basis to accept that the self-employment tax does not apply, so the paperwork genuinely matters.

For 2026/27 a self-employed person pays Class 4 National Insurance at 6% on profits between £12,570 and £50,270 and 2% above £50,270. Class 2 is no longer compulsory for those with profits above the small profits threshold of £7,105, who receive the qualifying year automatically, while those below can pay voluntarily at £3.65 a week to protect their record.

For most profitable businesses, considerably. The UK charge is capped in effect by the 2% rate above £50,270, whereas the US charges 12.4% up to $184,500 and 2.9% without limit. The gap widens as profits rise, which is why an unclaimed totalization exemption is one of the largest recoverable amounts in cross-border practice.

You can deduct one-half of your self-employment tax as an above-the-line adjustment in arriving at adjusted gross income. Note that the deduction covers half of the Social Security and Medicare elements only; the 0.9% Additional Medicare Tax is not deductible. This calculator makes that distinction, which several online tools do not.

It is a surtax of 0.9% that applies once your combined wages and self-employment income exceed $200,000 for single filers, $250,000 for joint filers or $125,000 for married filing separately. Unlike the main Medicare element there is no employer-equivalent half, so the whole 0.9% falls on you and none of it is deductible.

Wages already subject to Social Security withholding use up the $184,500 ceiling before your self-employment income does. Consequently, someone with a substantial salary alongside a side business may pay only the Medicare portion on their profit. Entering your wages in this calculator therefore changes the result materially.

The self-employment tax applies once your net earnings from self-employment reach $400 for the year. Below that figure no self-employment tax arises, although the income is still reportable and you may still need to file for other reasons.

Generally yes. Self-employment tax is not withheld at source, so it is paid through quarterly estimated tax payments alongside your income tax. Americans abroad often overlook this because their income tax is covered by the exclusion or by credits, and then face underpayment penalties on the self-employment element alone.

Self-employment tax applies to unincorporated trading profit. If you operate through a UK limited company you are not self-employed for these purposes, but that structure brings its own US consequences, including the controlled foreign corporation rules and the treatment of any salary or dividends you draw. Changing structure to solve one problem frequently creates another, so model both sides first.

Generally no. Social security contributions paid to a country with which the United States has a totalization agreement are not creditable foreign taxes. That is precisely why the agreement matters: it removes one charge altogether rather than allowing you to offset one against the other.

If a totalization agreement covered you and you paid the self-employment tax anyway, the amounts may be recoverable by amending the open years, supported by a certificate of coverage. There are time limits on refund claims, so the sooner the position is reviewed the more years remain in scope. This is a common and worthwhile review for Americans who have been self-employed in the United Kingdom for several years.