Handbook / Self-employment tax and 1099s

Schedule SE for the 2026 tax year: a line-by-line walk-through

Tax-year note: Tax information on this page applies to the 2026 tax year (returns filed in 2027), from IRS pages checked in November 2026. Figures and dates are labelled with their tax year where they appear. Check current IRS pages before you rely on them.

Schedule SE is the short form that turns your business profit into self-employment tax, the Social Security and Medicare tax you pay as your own employer and employee. It is only one page, but the order of steps explains why the tax is lower than "15.3% of profit" and why having a job alongside your business can change it. This guide walks through the 2026 form. Every figure is for the 2026 tax year and comes from the 2026 Schedule SE and its instructions, checked in November 2026.

Before you start

You need your Schedule C net profit, from line 31. If you have more than one business, combine them. If you also had wages, you need your Forms W-2. The guide on Schedule C covers how net profit is figured.

Who must file

The 2026 instructions say you must file Schedule SE if:

• line 4c is $400 or more, or
• you had church employee income of $108.28 or more.

They add that the tax applies regardless of age, and even if you already receive Social Security or Medicare benefits. The Social Security Administration uses the information to figure your benefits, which is one reason to file it accurately.

Part I, line by line

Line 1a and 1b. Farm profit and certain Conservation Reserve Program payments. Most non-farm freelancers leave these blank.

Line 2. Net profit or loss from Schedule C, line 31, plus certain partnership amounts.

Line 3. Combine lines 1a, 1b and 2.

Line 4a. If line 3 is more than zero, multiply it by 92.35%. This step is the reason the tax is less than 15.3% of profit: it mirrors the fact that employees do not pay Social Security tax on the employer's share.

Line 4b. Amounts from the optional methods in Part II, if you use them.

Line 4c. Combine 4a and 4b. If it is less than $400, the form says stop: you do not owe self-employment tax, unless you had church employee income.

Lines 5a and 5b. Church employee income, if any.

Line 6. Add 4c and 5b. This is your net earnings subject to the tax.

Line 7. The 2026 maximum combined wages and self-employment earnings subject to Social Security tax: $184,500.

Lines 8a to 8d. Social Security wages and tips from your W-2s, plus certain unreported tips and wages.

Line 9. Line 7 minus line 8d. If zero or less, no Social Security part is due.

Line 10. The smaller of line 6 or line 9, multiplied by 12.4%: the Social Security part.

Line 11. Line 6 multiplied by 2.9%: the Medicare part. There is no cap on this one.

Line 12. Add lines 10 and 11. This is your self-employment tax, which goes to Schedule 2 of Form 1040.

Line 13. Line 12 multiplied by 50%: the deduction for half of self-employment tax, which goes to Schedule 1. It reduces adjusted gross income for income tax, though not your self-employment tax itself.

A worked example

Example (2026 tax year): A photographer has $50,000 net profit on Schedule C and no wages. Line 4a: $50,000 x 92.35% = $46,175. Line 10: $46,175 x 12.4% = $5,725.70. Line 11: $46,175 x 2.9% = $1,339.08. Line 12: $7,064.78 self-employment tax. Line 13: $3,532.39 deduction on Schedule 1.

When you also have a job

Wages and self-employment earnings share the same Social Security limit. If our photographer also had $150,000 in W-2 Social Security wages, line 9 would be $184,500 minus $150,000, or $34,500. The 12.4% part would apply only to that $34,500, not the full $46,175. The 2.9% part would still apply to all $46,175.

The IRS self-employment tax page puts it simply: if your wages and tips are subject to Social Security tax and total at least $184,500 for 2026, you do not pay the 12.4% part on self-employment earnings, but you still pay the Medicare part.

Part II: optional methods

Part II lets people with low or negative earnings report a higher figure to keep earning Social Security credits or to affect certain credits based on earned income. For 2026, the instructions say the nonfarm optional method is available if your net nonfarm profits were less than $8,186 and also less than 72.189% of your gross nonfarm income, plus other conditions such as being regularly self-employed. It can increase your tax, so use it deliberately.

What Schedule SE does not include

The Additional Medicare Tax of 0.9% applies to combined wages and self-employment income above $250,000 for married filing jointly, $125,000 for married filing separately and $200,000 for other filers. It is figured on Form 8959, not Schedule SE.

Using the result

Your Schedule SE result is a large part of what you should set aside during the year. Divide line 12 by your net profit to see your effective self-employment tax rate, then add income tax to plan estimated payments. The working-alone guide on self-employment tax explains the bigger picture.

For 2026: profit x 92.35%, 12.4% up to the $184,500 limit less wages, 2.9% on everything, half deductible. That is Schedule SE.