It is taxable income, but I am not sure that it is "self-employment" income, as opposed to "other" income. The difference is that with self-employment income, you can deduct work-related expenses, but you pay income tax AND 15% self-employment tax on the "net profit" from the business. If this is "other" income, you can't deduct expenses, but you only pay income tax and not SE tax.
I don't think surrogacy meets the tests to be considered self-employment. I will check with another expert. @Hal_Al
