How is self-employment tax calculated?

Self-employment tax is 15.3% (12.4% Social Security plus 2.9% Medicare) applied to 92.35% of your net self-employment earnings. Social Security stops at the annual wage base; Medicare applies to all net earnings with no cap.

Why is income multiplied by 92.35%?

The IRS lets you reduce net earnings to 92.35% before applying SE tax, which approximates the employer-equivalent portion that an employee would not pay. This adjustment is built into Schedule SE and into this calculator.

Can I deduct part of the SE tax?

Yes. You may deduct one-half of your self-employment tax as an above-the-line adjustment to income. This calculator subtracts that half before computing your Nebraska state income tax, lowering the state liability.

Does Nebraska tax self-employment income?

Yes. Net self-employment income is subject to Nebraska's graduated state income tax just like wages. This tool applies the standard deduction and the state brackets after the half-SE-tax deduction.

Does this include federal income tax?

No. It covers the federal SE tax (Social Security and Medicare) and Nebraska state income tax. Your federal income tax on the same income is separate and depends on your full return.

Nebraska Self-Employment Tax Calculator

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Self-employment means you pay both the employee and employer halves of Social Security and Medicare — the 15.3% self-employment tax — on top of regular income tax. In Nebraska, your net profit is also subject to the state’s graduated income tax. This calculator handles both: it computes federal SE tax on the adjusted earnings base, applies the deductible half-SE-tax adjustment, and then layers on Nebraska state income tax.

How it works

The calculation follows IRS Schedule SE plus Nebraska’s income tax:

SE Base = Net SE Income x 0.9235
Social Security = min(SE Base, wage base) x 12.4%
Medicare = SE Base x 2.9%
SE Tax = Social Security + Medicare
Half-SE Deduction = SE Tax / 2
NE Taxable = Net SE Income - Half-SE Deduction - NE Standard Deduction
NE State Tax = graduated brackets applied to NE Taxable

92.35% adjustment. Net earnings are reduced to 92.35% before SE tax applies.
Social Security (12.4%) stops at the annual wage base; Medicare (2.9%) has no cap.
Half the SE tax is deductible, reducing the income on which Nebraska tax is computed.
Nebraska state tax uses the graduated brackets after the standard deduction.

Tips and example

On $80,000 of net self-employment income, the SE base is $73,880. Social Security at 12.4% and Medicare at 2.9% give roughly $11,303 in SE tax. Half of that ($5,652) is deducted before Nebraska tax, so the state computes its graduated tax on about $74,348 minus the standard deduction.

Set money aside through the year — SE tax alone is over 15% before any income tax. Quarterly estimated payments to the IRS and Nebraska avoid underpayment penalties. This tool covers SE tax and Nebraska state tax; your separate federal income tax depends on your full return.