What is the self-employment tax rate?

The federal self-employment tax is 15.3% — 12.4% for Social Security (up to the annual wage base) plus 2.9% for Medicare (uncapped). It is applied to 92.35% of your net self-employment earnings.

Why is only 92.35% of my profit taxed?

The 7.65% reduction approximates the employer-half of payroll taxes that an employee would not pay on, putting the self-employed on roughly equal footing with W-2 workers. The calculator applies this factor automatically.

Can I deduct half of the SE tax?

Yes. You can deduct the employer-equivalent half of your self-employment tax when figuring your income tax. The calculator subtracts this half before computing your New Mexico state income tax.

Does New Mexico add its own self-employment tax?

New Mexico has no separate self-employment tax. Your self-employment income is simply subject to New Mexico's regular graduated income tax (1.5% to 5.9%), which this tool calculates after the half-SE-tax deduction.

Does this include federal income tax?

No. This tool isolates self-employment tax plus New Mexico state income tax. Your federal income tax is separate and depends on your total income, deductions and credits, so budget for it on top of these figures.

New Mexico Self-Employment Tax Calculator

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Being self-employed in New Mexico means you owe both halves of Social Security and Medicare — the 15.3% self-employment tax — plus New Mexico’s regular graduated income tax on your profit. This calculator combines them and applies the deductible half-SE-tax adjustment so you can estimate your quarterly liability accurately. Federal income tax is excluded so you can see SE tax and state tax on their own.

How it works

The calculation follows the IRS Schedule SE method, then layers on New Mexico tax:

SE-taxable base. Net profit is multiplied by 92.35% to approximate the employee-equivalent earnings base.
Federal SE tax. 12.4% Social Security is applied up to the wage base (reduced by any W-2 wages you already paid OASDI on), plus 2.9% Medicare with no cap — together the headline 15.3%.
Half-SE deduction. Half of the SE tax is deducted from income before state tax, just as on the federal return.
New Mexico income tax. The graduated New Mexico rates (1.5% to 5.9%) are applied to net profit minus the half-SE deduction and the standard deduction.

Tips and notes

If you also have a W-2 job, enter those wages so the Social Security portion respects the shared annual wage base — without this, high earners overstate their SE tax.
New Mexico has no separate self-employment levy; the state portion here is just ordinary income tax on your business profit.
Set aside money for federal income tax too — it is not included here and is usually the largest of the three. Many self-employed New Mexicans make quarterly estimated payments to cover SE tax, federal income tax and state tax together.