What this line means
Your total self-employment tax from Schedule SE. Self-employment tax is the self-employed equivalent of Social Security and Medicare taxes (FICA) that W-2 employees split with their employer. The rate is 15.3% on the first $176,100 of net self-employment earnings for 2025 (12.4% Social Security plus 2.9% Medicare), then 2.9% on earnings above that threshold. The tax is calculated on 92.35% of net profit, not the full amount.
Does this apply to you?
- You have net self-employment earnings of $400 or more from Schedule C, Schedule F, or other self-employment income
- You are a sole proprietor, freelancer, independent contractor, or gig worker
- You are a partner in a partnership and received self-employment income on Schedule K-1
- You are a farmer with net farm profit on Schedule F
Easy to overlook
SE tax applies even if you also have a W-2 job If you have a side business and a regular job, both your W-2 wages and self-employment earnings count toward the $176,100 Social Security wage base. 1 Your W-2 wages are applied first. If your W-2 wages are $150,000 and your net self-employment income is $50,000, only $26,100 of the self-employment income is subject to the 12.4% Social Security portion. The 2.9% Medicare portion applies to all self-employment earnings regardless of the wage base. IRS Schedule SE Instructions — Self-Employment Tax
First-time self-employed filers often do not budget for SE tax Unlike W-2 employees who see FICA taken from every paycheck, self-employed filers owe the full 15.3% at filing time (or through quarterly estimated payments). 2 A freelancer with $60,000 in net profit owes roughly $8,478 in self-employment tax — on top of income tax. This catches first-time gig workers and freelancers off guard because the amount is larger than they expected. General filing pattern — first-time self-employed miss SE tax entirely
Watch out for this
Entering net self-employment income directly on this line instead of the calculated tax from Schedule SE. This line is for the tax amount, not the income amount. A $60,000 net profit produces roughly $8,478 in SE tax — entering $60,000 here instead of $8,478 overstates your tax liability by a factor of seven.
Footnotes
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IRS Schedule SE (Form 1040) Instructions, Combined Wages and Self-Employment. https://www.irs.gov/instructions/i1040sse ↩
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IRS Schedule SE (Form 1040) Instructions, Who Must Pay Self-Employment Tax. https://www.irs.gov/instructions/i1040sse ↩