What is the self-employment tax rate?

Federal self-employment tax is 15.3%: 12.4% for Social Security on net earnings up to the wage base ($168,600 for 2024) plus 2.9% for Medicare on all net earnings, with an extra 0.9% Medicare surtax above $200,000. It is computed on 92.35% of your net profit.

Why is only 92.35% of my income taxed?

The 92.35% factor (1 minus 7.65%) represents the employer-equivalent share of FICA that an employee would not pay tax on. It approximates the deduction a regular employee gets for the employer's half of payroll taxes, so the self-employed are not taxed on that portion.

How does the half-SE-tax deduction work?

You can deduct one-half of your self-employment tax as an above-the-line adjustment to income. This reduces your adjusted gross income before North Carolina's 4.5% income tax is applied, which this tool accounts for when computing the state portion.

Does North Carolina tax self-employment income?

Yes. North Carolina taxes net self-employment income through its flat 4.5% individual income tax, the same as wage income. It does not levy a separate self-employment tax; the 15.3% SE tax is purely federal Social Security and Medicare.

Do I need to pay quarterly estimated taxes?

Usually yes. If you expect to owe $1,000 or more in federal tax, the IRS requires quarterly estimated payments, and North Carolina has its own estimated payment rules. Use this estimate to size your quarterly payments and avoid underpayment penalties.

North Carolina Self-Employment Tax Calculator

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Self-employed North Carolina workers owe both the federal self-employment tax for Social Security and Medicare and North Carolina’s flat state income tax. This calculator applies the correct 92.35 percent net-earnings factor, the federal SE rates, and the state 4.5 percent rate to your net profit.

How it works

Self-employment tax is built on 92.35 percent of your net profit, then split into Social Security and Medicare:

net earnings = net profit × 0.9235
social sec   = 12.4% of net earnings up to $168,600
medicare     = 2.9% of all net earnings (+0.9% over $200,000)
SE tax       = social sec + medicare

Half of the SE tax is deductible above the line. North Carolina then taxes your net profit minus that half-SE-tax deduction at 4.5 percent:

NC tax = (net profit − ½ SE tax) × 4.5%

Example

On $80,000 of net profit, net earnings are $80,000 × 0.9235 = $73,880. SE tax is 12.4% + 2.9% = 15.3% of $73,880 = about $11,304. Half of that ($5,652) is deductible, so North Carolina taxes ($80,000 − $5,652) = $74,348 at 4.5% = about $3,346. Total is roughly $14,650 before federal income tax.

Notes

This tool covers SE tax plus North Carolina income tax on the business profit. It does not include federal income tax (separate brackets) or the North Carolina standard deduction, which would reduce the state figure further on a full return. The Social Security portion stops at the wage base, while Medicare has no cap. Confirm figures on Schedule SE and Form D-400 at irs.gov and ncdor.gov.