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:
|
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:
|
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