The self-employment tax is a federal tax paid by freelancers, independent contractors, small business owners, and others on their net earnings. It’s used to collect Social Security and Medicare taxes from self-employed individuals. The self-employment tax equals the total amount due for those two taxes. The self-employment tax is higher than the Social Security and Medicare taxes you pay when you work for someone else because employers are required to pay half their employees’ Social Security and Medicare taxes. As a self-employed person, you have to pay the entire amount yourself.
