What is the self-employment tax rate for net earnings?

The self-employment tax rate for net earnings is 15.3%. This tax rate combines two components: 12.4% for Social Security and 2.9% for Medicare. The Social Security portion is applied to the first $160,200 of net earnings for the 2023 tax year. For income above this threshold, only the 2.9% Medicare portion applies, without any cap. This dual structure of the self-employment tax ensures that self-employed individuals contribute to both Social Security and Medicare, just as employees do through payroll taxes. Understanding this tax rate is essential for anyone who is self-employed, as it directly impacts their overall tax liability.