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Social Security Taxes on Self-Employment Income

Excerpted from "Social Security Handbook". See the up-to-date, official Social Security Handbook at ssa.gov.

1415. Social Security Taxes on Self-Employment Income

1415.1 What are the tax rates on self-employment income?

Social Security taxes are paid on self-employment income up to the maximum amount creditable for the year. Medicare taxes are paid on all self-employment income, as there is no yearly maximum. (See §1201.) The Social Security and Medicare tax rates on self-employment income are shown in the following chart:


Social Security and Medicare Tax Rates (Self-Employment)

Taxable year

Retirement, survivors, and disability insurance rate

Hospital insurance rate

Combined rate

1985

11.40%

2.70%

14.10%

1986-1987

11.40%

2.90%

14.30%

1988-1989

12.12%

2.90%

15.02%

1990 and later

12.40%

2.90%

15.30%

1415.2 What tax credits are allowed for self-employed persons?

If you were self-employed in 1984-1989, you were allowed credit against your Social Security and Medicare tax liability for those years in the following percentages:


Self-Employed Tax Credits

Taxable Year

Percentage Rate

1984

2.7%

1985

2.3%

1986-1989

2.0%

After 1989, the credit was replaced with special deduction provisions designed to treat the self-employed like employees and employers are treated for Social Security and income tax purposes.

Last Revised: March, 2001

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