Self-employment tax for gig drivers: the 15.3 percent nobody withholds
A W-2 employee pays half of Social Security and Medicare and never sees the other half, because the employer pays it. A rideshare, delivery or trucking driver is both halves. That is self-employment tax, it is due on top of income tax, and it is the part of a driver's first tax bill that surprises people most.
What it is, and what it is not
Self-employment tax is Social Security and Medicare for people who work for themselves. The regular rate is 15.3 percent: 12.4 percent for Social Security plus 2.9 percent for Medicare, both halves, because you pay the employee's share and the employer's share. It is charged on net earnings from self-employment, which are generally 92.35 percent of your net business profit.
It is not income tax. Income tax is worked out separately on your whole return, after deductions and credits. A driver with a modest profit can owe little or no federal income tax and still owe self-employment tax, because the two start from different places and the second has no standard deduction in front of it.
The arithmetic, step by step
Start with net profit: your business income less your ordinary and necessary business deductions. If you use the standard mileage method, the mileage deduction is one of those deductions, and for most drivers it is the largest. Multiply the profit by 92.35 percent to get net earnings from self-employment. Multiply that by 15.3 percent for the regular tax.
Two limits sit on top of the simple version. The 12.4 percent Social Security part stops at the annual wage base, which for 2026 is $184,500, after counting any W-2 Social Security wages you already have. The 2.9 percent Medicare part has no cap, and a separate 0.9 percent Additional Medicare Tax can apply once combined wages and self-employment income pass $200,000, or $250,000 married filing jointly and $125,000 married filing separately. Most drivers never reach either line, and the worked example below stays well under both.
- Net earnings are 92.35 percent of profit, not 100 percent. The reduction stands in for the employer half that an employee never sees taxed.
- The tax is on profit, not on gross payouts. Deductions come first; the QBI deduction does not reduce the earnings this tax is charged on.
- Below $400 of net earnings for the year there is no self-employment tax and no Schedule SE.
Half of it comes back as a deduction
Schedule SE produces an adjustment to income for one-half of the regular self-employment tax, reported on Schedule 1. It reduces adjusted gross income, and so can reduce federal income tax, but it does not reduce the self-employment tax itself. The Additional Medicare Tax, where it applies, is worked out separately on Form 8959 and is not part of that half.
The deduction is the reason a self-employed driver's true marginal rate is a little lower than a first look suggests, and it is why RoadKept's set-aside figure is built from the whole return rather than from the 15.3 percent alone.
How it gets paid
Nobody withholds it. It is paid through the four estimated-tax instalments, alongside income tax, or settled with the return in April with the underpayment penalty that late payment can carry. A driver setting money aside from each payout is setting aside self-employment tax as much as income tax, and in a lean year it is usually the larger of the two.
If you also have a W-2 job, the wages there already carried Social Security and Medicare withholding, and they count toward the wage base. The self-employment tax is worked out on the driving income on top of that.
How RoadKept handles it
RoadKept's tax estimate includes self-employment tax from the first dollar of profit above the threshold, applies the wage base after any W-2 wages you record, reports the 0.9 percent inside Medicare where it applies, and deducts the correct half on the income-tax side. The set-aside figure it shows is the combined amount, so a driver saving toward it is not surprised twice. Every figure is an estimate for planning, and it says so on the screen that shows it.
One year's profit, worked through
A driver ends the year with $30,000.00 of net profit after the mileage deduction and other business costs, and no W-2 wages.
| Net earnings from self-employment — $30,000.00 × 92.35% | $27,705.00 |
|---|---|
|
Self-employment tax — net earnings × 15.3% 12.4% Social Security plus 2.9% Medicare, both halves. |
$4,238.87 |
|
Deducted on Schedule 1 — half of the regular tax Reduces the income that federal income tax is charged on; it does not reduce this tax. |
$2,119.43 |
Net earnings here are far below the $184,500.00 Social Security wage base and the Additional Medicare threshold, so neither limit changes the figure. Income tax is worked out separately on the whole return, and this is owed on top of it.
Work it out from your own log — free
No card. Log a week and RoadKept shows the figure for your miles, at the right rate for each date.
Work it through with your own figures
The Self-Employment Tax Calculator takes the numbers from your own log and does this arithmetic for you, free and without an account.
Questions drivers ask
How is self-employment tax calculated?
Net earnings from self-employment are generally 92.35% of your net profit. The regular tax on that is 12.4% Social Security plus 2.9% Medicare — both halves, because you pay the employee and the employer share. For 2026 the 12.4% applies only up to the $184,500 Social Security wage base, after taking any W-2 Social Security wages into account; Medicare has no cap. A separate 0.9% Additional Medicare Tax can apply once combined Medicare wages and self-employment income pass $250,000 married filing jointly, $125,000 married filing separately, or $200,000 otherwise. Special and optional Schedule SE rules can also apply.
Can I deduct any of it?
Yes. Schedule SE produces an adjustment to income for one-half of the regular self-employment tax, reported on Schedule 1. It reduces adjusted gross income and can reduce federal income tax, but it does not reduce the self-employment tax itself. Additional Medicare Tax is worked out separately on Form 8959 and is not part of that one-half deduction. This calculator shows the deductible figure.
Do I owe it on gross earnings?
No — on net earnings from self-employment, not gross receipts. Ordinary and necessary business deductions reduce your Schedule C profit before Schedule SE is calculated, and if you are eligible for and use the standard mileage method the mileage deduction is one of them. Note that the QBI deduction does not reduce the earnings self-employment tax is charged on.
When do I owe self-employment tax?
You generally must file Schedule SE and pay self-employment tax once your combined net earnings from self-employment reach $400 for the year. Special rules apply to certain church-employee income and to the optional methods for low earnings or a loss.