How to Calculate Self-Employed Payroll Taxes

by Matt McGew

Unlike an employee, self-employed individuals do not have payroll taxes automatically deducted from compensation. However, the Internal Revenue Service (IRS) does require a self-employed person to pay a self-employment tax to cover Social Security and Medicare. Although not directly a payroll tax, as a self-employed person you may want to keep track of your self-employment tax liability to avoid owing the IRS a substantial sum of money when you make your quarterly tax payments.

1. Determine the gross amount of self-employed income for a specific pay period. For example, assume you earn $2,000 in self-employed income during a pay period.

2. Determine the current self-employment tax rate. Normally, the self-employment tax rate is 15.3 percent. However, the Tax Relief Act of 2010 temporarily reduced the self-employment tax rate to 13.3 percent. Assume that the current self-employment tax rate is 13.3 percent.

3. Multiply your self-employed income for the pay period by the current self-employment tax rate expressed as a percentage. Continuing the same example, $2,000 x .133 = $266. This figure represents your self-employed payroll taxes.


  • The IRS only requires you to pay the Social Security portion of the self-employment tax on your first $106,800 of income.

About the Author

Since 1992 Matt McGew has provided content for on and offline businesses and publications. Previous work has appeared in the "Los Angeles Times," Travelocity and "GQ Magazine." McGew specializes in search engine optimization and has a Master of Arts in journalism from New York University.

Photo Credits

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