04/03/2026
If you've ever looked at your tax bill as a business owner and thought "why do I owe so much?", self-employment tax might be a big part of the answer.
In a traditional employee-employer relationship, each party pays an equal share of the F**A tax, which covers Social Security and Medicare. Self-employed individuals, however, must pay both the employer and employee shares themselves.
That adds up to a 15.3% self-employment tax rate. 12.4% for Social Security and 2.9% for Medicare and that's on top of your regular federal income tax.
So while an employee effectively pays 7.65%, you're covering the full 15.3% because you're both the worker and the employer in the eyes of the IRS.
There is a small silver lining: the IRS allows you to deduct 50% of your self-employment tax on your federal income tax return. And smart tax planning (like S-Corp elections, retirement contributions, and maximizing deductions) can significantly reduce what you owe.
The bottom line? Self-employment tax isn't a penalty for working for yourself. But without the right strategy, you could end up paying far more than necessary.
That's where we come in. Let's build a plan that works in your favor. 👇
