SE Tax calculation (it’s not circular)
You will pay Self Employment tax (Scheduled SE) on a Net Profit of $400 or more on Schedule C in addition to regular income tax on it. You pay 15.3% SE tax on 92.35% of your Net Profit (If it is greater than $400). The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire.
The SE tax includes what you already paid in from your W2s so your schedule SE tax will only be the difference up to the max amount of $10,918.20 for social security. The max income for social security for 2025 is $176,100 between W2 wages and the schedule C Net Profit. If you also have W2 income, you have to break out the Social Security and Medicare taxes. Only the Social Security part maxes out.
You are paying 15.3% for……
SS for employer 6.2%
SS for employee 6.2%
Medicare for employer 1.45%
Medicare for employee 1.45%
