Calculate self-employment tax liability.
Self-employment tax is not charged on the whole of net earnings. A statutory adjustment — around 92.35% in the United States — reduces the base first, and the main contribution stops at an annual earnings cap. Half the resulting amount is normally deductible when calculating income tax, which is why the effective rate on net earnings sits below the headline percentage.
Self-employment contribution
Taxable base = min(net earnings x taxable share/100, earnings cap); contribution = taxable base x combined rate/100
Contribution rates, statutory adjustments, caps and deductibility differ by country and change each tax year. This is a simplified estimate for planning and is not tax advice — confirm your position with a qualified professional.
Because the rules allow an adjustment that mirrors the employer share an employee would not pay themselves. In the US that adjustment leaves 92.35% of net earnings in the base.
Not always. In the US the Social Security portion is capped while the Medicare portion continues, with an additional rate above a higher threshold. Model those separately if they apply to you.
Typically half of it is deductible against income tax, which is shown here. It reduces income tax rather than the contribution itself.