If you drive for Uber, deliver for DoorDash, freelance on Fiverr, or do any work as an independent contractor, you’re self-employed in the eyes of the IRS. That means you owe self-employment tax on top of regular income tax — and calculating it correctly is essential to avoid underpaying and facing IRS penalties. Here’s how to do it.
What Is Self-Employment Tax?
Self-employment (SE) tax is the gig worker’s version of FICA — the Social Security and Medicare taxes that employees split with their employer. As a self-employed worker, you pay both halves:
Social Security: 12.4% (on income up to $176,100 in 2026)
Medicare: 2.9% (no income cap)
Total SE tax rate: 15.3%
How to Calculate Self-Employment Tax: Step by Step
Step 1: Calculate Your Net Self-Employment Income
Start with your total gig income and subtract your business expenses (mileage, phone, equipment, etc.):
Net income = Gross gig earnings − Business deductions
The IRS lets you deduct the “employer half” of SE tax before calculating the tax. The practical effect is that you apply SE tax to 92.35% of your net income:
SE tax base = Net income × 0.9235
Step 3: Multiply by 15.3%
SE tax = SE tax base × 15.3%
Full Example
Step
Calculation
Amount
Gross gig income
—
$35,000
Business deductions (mileage, phone)
—
−$8,500
Net self-employment income
$35,000 − $8,500
$26,500
SE tax base (92.35%)
$26,500 × 0.9235
$24,473
Self-employment tax (15.3%)
$24,473 × 0.153
$3,744
Key Deductions That Reduce Self-Employment Tax
Mileage: 70 cents/mile (2026 rate) for every business mile driven
Phone: Business-use percentage of your monthly bill
Home office: If you use a dedicated space for managing your gig work
Equipment: Delivery bags, car accessories, tools, camera gear
Health insurance: 100% deductible if self-employed with no other coverage
Half of SE tax: You deduct 50% of your SE tax on Form 1040 before calculating income tax
Quarterly Estimated Tax Payments
Gig workers must pay estimated taxes quarterly if they expect to owe $1,000+ for the year. A simple safe harbor: pay 100% of your prior year’s tax liability in quarterly installments. This protects you from underpayment penalties even if you earn more this year.
What is the self-employment tax rate for gig workers in 2026?
The self-employment tax rate is 15.3% — 12.4% for Social Security (up to $176,100 income) and 2.9% for Medicare. This is applied to 92.35% of your net self-employment income.
Do I owe self-employment tax if I earned less than $400?
No. You only owe self-employment tax if your net self-employment income is $400 or more for the year. Below that threshold, no SE tax is due (though income tax may still apply if you have other income).
