Schedule SE

Net earnings from self-employment start from your Schedule C profit. Once they reach $400 for the year, the whole amount is taxed. You then file Schedule SE with your return, even if you owe no income tax. Below $400, you owe none.

The wage base is set each year, and for 2025 returns it was $176,100. The Medicare part has no such limit. A further 0.9% Additional Medicare Tax applies once wages and self-employment income together pass $200,000. The threshold is $250,000 on a joint return and $125,000 filing separately. That tax is figured on Form 8959, not Schedule SE. None of these thresholds rises with inflation.

The tax itself goes on Schedule 2, where it is added to what you owe with Form 1040. Half of it, leaving out the 0.9%, is deducted on Schedule 1 in figuring your adjusted gross income. That deduction lowers your income tax only.

Below the wage base, the tax comes to about 14.1% of profit, since the rate applies to 92.35% of it. The 15.3% often quoted overstates it. Deductions that lower only income tax, such as the one for qualified tips, leave it unchanged.