Self-Employment Tax

Self-Employment Tax is a Social Security and Medicare tax paid by self-employed individuals, covering both employee and employer portions, typically 15.3% of net earnings.

1. What is self-employment tax?
   Answer: It is a tax covering Social Security and Medicare for self-employed individuals.
   
2. What is the rate?
   Answer: It is 15.3% (12.4% Social Security, 2.9% Medicare) on net earnings in 2025.
   
3. Who pays it?
   Answer: Self-employed individuals pay it.
   
4. What is the cap?
   Answer: Social Security has a cap (e.g., $168,600 in 2025); Medicare does not.
   
5. How does HR assist?
   Answer: HR educates transitioning employees on tax obligations.