At a glance
- Self-employment tax is 15.3% for Social Security and Medicare once your net profit reaches $400
- All of your gig income is taxable, even without a 1099
- Business costs lower the profit you're taxed on, so records matter
- No tax is withheld, so you may need quarterly payments
What self-employment tax is
When you work for an employer, they pay half of your Social Security and Medicare and take the other half from your check. When you're self-employed, you pay both halves yourself: 12.4% for Social Security (on net earnings up to $184,500 for 2026, combined with any wages) and 2.9% for Medicare. It's figured on Schedule SE, using 92.35% of your net profit, and half of it is deducted when figuring your income tax.
It applies once your net earnings from self-employment are $400 or more, and it's owed on top of regular income tax.
Which forms you might get
- 1099-NEC from a client or company that paid you $600 or more in 2025. For payments made in 2026 the threshold rises to $2,000.
- 1099-K from a payment app or marketplace once you pass $20,000 and 200 transactions in a year.
- 1099-MISC for things like rent or prizes.
These forms are just reports. Income below the thresholds, or paid in cash, Zelle or Cash App, still goes on your return.
Common deductions
- Car: 72.5 cents per business mile for 2026, or actual costs for the business share. Driving from home to a regular workplace is commuting and doesn't count.
- Phone and internet: the business share of your bill.
- Supplies and equipment: cleaning supplies, tools, insulated bags, a phone mount.
- App and platform fees that come out of your pay.
- Home office: only for space used regularly and only for the business, for example $5 per square foot up to 300 square feet with the simplified method.
- Health insurance you pay for yourself, in many cases.
- Retirement savings in a SEP IRA or solo 401(k).
Many self-employed people also get the qualified business income deduction, up to 20% of their business profit. Tips in certain jobs may qualify for the new tips deduction.
How to stay ahead
- Open a separate bank account or card for the business.
- Keep a mileage and expense log as you go.
- Set aside part of every payout for taxes.
- Download your yearly earnings summary from each app in January.
Questions about your situation?
Book a free 15-minute call. Year-round help from the same team, and you can call us when an IRS letter shows up in July.
Free 15-minute callNot ready yet? Get a reminder in JanuaryOfficial sources: IRS: Self-employment tax ↗ · IRS: Gig economy tax center ↗ · IRS: Standard mileage rates ↗
Updated October 2026 for 2026 returns filed in 2027. General information only, not tax advice for your situation. Rules can change; your situation is confirmed when we prepare your return.
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