A good year of self-employment often brings a big April bill. Two taxes land on the same profit, and no employer withheld either one. Here's how the math works, with an example, and how to plan so next year is easier.
Self-employment tax is your Social Security and Medicare. An employee pays half and the employer pays the other half. When you work for yourself, you pay both halves. The rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. It applies to 92.35% of your net earnings, once those earnings reach $400 for the year.
In 2026, only the first $184,500 of earnings is subject to the Social Security part. The Medicare part has no cap. An extra 0.9% Medicare tax applies to earnings over $200,000, or $250,000 if married filing jointly ($125,000 if married filing separately). Half of your self-employment tax is deducted when your adjusted gross income is figured.
Income tax is then figured on your profit, along with any other income, using the regular brackets. Many owners also get the qualified business income deduction, which can take up to 20% of the business profit off the income that's taxed.
That's why you can owe so much on a self-employed tax bill after a year that went well. The profit was real, and nothing was withheld from it.
Sources: IRS Topic 554 (self-employment tax), IRS Topic 560 (Additional Medicare Tax), and the 2026 Form 1040-ES for the $184,500 wage base. Checked 26 October 2026.
Sam is a single consultant with $60,000 of profit in 2026 and no other income.
If Sam paid nothing during the year, all of it is due in April. Paid in four estimated payments, it's about $3,010 each time.
This is a made-up example with rounded numbers. It leaves out state tax, retirement contributions, health insurance and other deductions. Higher profits usually mean a higher share, because the income tax bracket rises. Your own numbers will differ. On the free call, we run them with you.
We find out why you owe, check the withholding and estimates with you, keep the books for a business, prepare the next return, and plan the year so April brings no surprise. Steven Palmieri holds no CPA license, and for a surprise tax bill the practice is the Tax CFO alternative.
Two kinds of work need a license of their own. An audit or review report on financial statements is signed by a CPA firm, and speaking for you in an IRS exam or collection case takes an enrolled agent or an attorney. If you need either one, we'll tell you on the first call and point you to someone who does that work. Payroll is setup only: we set it up with the provider you pick, and you run each payday. You can read more about this on our disclosures page.
About 14.1% of net profit (15.3% of 92.35%), until the Social Security part reaches the $184,500 cap for 2026. Income tax comes on top of that.
No. The 2.9% Medicare part applies to all of your net earnings. The cap applies only to the 12.4% Social Security part, and the cap changes each year.
As a rough start, yes. But a higher profit, a different bracket or a change in what you already paid will move the number. It's worth checking it against your books once a quarter.
Sometimes. In an S corporation, you pay yourself a reasonable salary through payroll, and payroll taxes apply to that salary, not to the rest of the profit. It also adds payroll and a separate business return, so it fits some owners better than others. On the call, we look at whether it fits you.
Yes, when they're ordinary and necessary for the business and you have records. Costs lower your profit, which lowers both the self-employment tax and the income tax.
Send a short note, and we'll set up a free 30-minute call. We'll find out why this year's bill was so large and work out what to set aside next year.
You will be talking to the Steven Palmieri practice.