What is the self-employment tax rate?

The federal self-employment tax rate is 15.3%: 12.4% for Social Security on earnings up to the annual wage base (168,600 dollars in 2024) plus 2.9% for Medicare with no income cap. It is applied to 92.35% of your net self-employment earnings.

Why is only 92.35% of my profit taxed?

Self-employed people deduct the employer-equivalent portion before computing SE tax, which mathematically reduces the taxable base to 92.35% of net profit. This mirrors the fact that employees do not pay payroll tax on their employer's half.

Does Michigan have its own self-employment tax?

Michigan has no separate self-employment tax. Self-employment income flows into your Michigan adjusted gross income and is taxed at the flat 4.25% state rate, after personal exemptions, the same as wage income.

Can I deduct half of my SE tax?

Yes. One-half of your federal self-employment tax is an above-the-line deduction on your federal return, lowering your federal adjusted gross income and, in turn, the income that flows to your Michigan return.

How accurate is this calculator?

It accurately models the SE tax and the flat Michigan rate. It does not compute federal income tax brackets, the additional 0.9% Medicare surtax on very high earners, the qualified business income deduction, or any city income tax.

Michigan Self-Employment Tax Calculator

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If you freelance or run a business in Michigan, you owe two layers of tax on your profit: the federal self-employment tax that funds Social Security and Medicare, and Michigan’s flat 4.25% income tax. This calculator stacks them correctly, including the rule that lets you deduct half of your SE tax.

How it works

The calculation follows the federal Schedule SE method, then adds the Michigan layer:

Compute the SE base. Multiply net self-employment earnings by 92.35% — the employer-equivalent adjustment.
Apply 15.3%. Charge 12.4% Social Security on the base up to the wage cap ($168,600 in 2024) and 2.9% Medicare on the full base.
Deduct half, then tax for Michigan. Half of the SE tax is deductible; subtract it and your Michigan exemptions, then apply the flat 4.25% to what remains.

The Social Security portion stops at the wage base: socialSecurity = min(seBase, 168600) × 0.124, while Medicare has no cap: medicare = seBase × 0.029.

Tips and example

On $60,000 of net profit, the SE base is $60,000 × 0.9235 = $55,410. SE tax is $55,410 × 15.3% = $8,478. Half of that, $4,239, is deductible. With one Michigan exemption of $5,600, Michigan taxable income is $60,000 − $4,239 − $5,600 = $50,161, so Michigan tax is $50,161 × 4.25% = $2,132.

This does not compute your federal income tax brackets, the 0.9% additional Medicare surtax on high earners, the qualified business income deduction, or any Michigan city income tax. Quarterly estimated payments are usually required for self-employed filers.