John M. Hoffman & Associates CPAs
Frequently Asked Tax Questions
"What is the rate that I pay in self employment tax?"
Self employment tax is paid at a rate equal to what would be paid for an employee. To achieve that parity, the formula is 92.35% of net self employment earnings are taxes at a rate of 15.3%. The 15.3% applies up to the social security wage base (for 2007 that base is $97,500). Above that amount of income, the rate drops to 2.9% (the Medicare component).
