What Is Schedule SE?

Schedule SE is the federal tax schedule individuals use to calculate self-employment tax on qualifying net earnings from self-employment. The tax generally funds Social Security and Medicare, much like payroll taxes on employee wages. Schedule SE is attached to Form 1040, but it is separate from Schedule C, which calculates a sole proprietor's business profit or loss.

Who generally files Schedule SE?

A self-employed person generally must pay self-employment tax when net earnings from self-employment are $400 or more. Schedule SE can include income from a sole proprietorship, an independent-contractor activity, certain partnership earnings and guaranteed payments, and certain ministerial or church-employee income.

Not every type of business income belongs on Schedule SE. S corporation distributions generally are not self-employment earnings, although wages paid to a working shareholder are subject to payroll taxes. Rental income, investment income, and limited-partner items can also follow special rules. The label on a payment or tax form does not decide the result by itself.

Each spouse with self-employment earnings generally completes a separate Schedule SE. A taxpayer with more than one self-employed activity generally combines the qualifying net earnings for the self-employment-tax calculation.

How Schedule SE works

The regular calculation generally follows these steps:

1. Combine qualifying profit or loss from Schedule C, Schedule F, partnerships, and other applicable sources.
2. Apply the statutory adjustment used to determine net earnings from self-employment. Under the regular method, this is generally 92.35% of the qualifying amount.
3. Apply the Social Security portion up to the annual wage base, after accounting for wages already subject to Social Security tax.
4. Apply the Medicare portion, which does not use the same wage-base ceiling.
5. Carry the self-employment tax to Schedule 2 and Form 1040.
6. Carry the deductible portion of self-employment tax to Schedule 1 as an adjustment to income.

The familiar 15.3% combined rate consists of 12.4% for Social Security and 2.9% for Medicare, but it is not simply multiplied by every dollar of Schedule C profit. The 92.35% adjustment, annual Social Security wage base, W-2 wages, special income rules, and Additional Medicare Tax can change the result.

Schedule SE example

Assume a sole proprietor reports $100,000 of gross receipts and $40,000 of allowable business expenses, including a $1,500 home-office deduction. Schedule C net profit is $60,000.

Using the regular method:

• $60,000 × 92.35% = $55,410 of net earnings from self-employment.
• If the taxpayer has no Social Security wages and remains below the annual wage base, $55,410 × 15.3% = $8,477.73 of self-employment tax.
• One-half of that amount, approximately $4,238.87, is generally deductible as an adjustment to income.

The deduction for one-half of self-employment tax reduces income subject to federal income tax. It does not reduce the self-employment tax already calculated.

Where Schedule SE amounts appear

For 2025 returns, Schedule SE calculates self-employment tax in Part I. The tax generally flows to Schedule 2 and then Form 1040. The deductible portion generally flows to Schedule 1.

Schedule C profit generally flows to Schedule 1 as business income before it enters adjusted gross income. These separate paths explain why one business profit can affect both income tax and self-employment tax.

Schedule SE vs. Schedule C

Schedule C reports income and deductible expenses for a sole proprietorship or qualifying single-member LLC. Schedule SE calculates self-employment tax.

A person may file Schedule C but have no Schedule SE tax because the combined net earnings are below the general threshold or because special rules apply. A person may also file Schedule SE without Schedule C—for example, because of certain partnership or ministerial income.

Federal and California treatment

Self-employment tax is a federal tax. California does not impose a separate California version of Social Security and Medicare self-employment tax or require a California Schedule SE.

California residents generally report their business income or loss on Form 540, beginning with federal amounts and making California adjustments when state law differs. California treatment of the federal deduction related to self-employment tax should be reviewed through the current Schedule CA instructions.

Because California income tax and federal self-employment tax are separate, a taxpayer may need federal and California estimated payments even though only the federal projection includes Schedule SE tax.

Common mistakes

• Multiplying Schedule C profit by 15.3% without applying the Schedule SE mechanics
• Ignoring W-2 wages when applying the Social Security wage base
• Treating S corporation distributions as Schedule SE income
• Forgetting partnership guaranteed payments or other qualifying earnings
• Treating the deductible portion as a business expense on Schedule C
• Assuming retirement age or receipt of Social Security benefits eliminates the tax
• Combining spouses on one Schedule SE

Frequently asked questions

Related terms

• Self-Employment Tax
• Schedule C
• Net Profit (Net Income)
• Independent Contractor
• Estimated Tax Payments
• Sole Proprietorship

Official sources

• IRS — About Schedule SE (Form 1040)
• IRS — 2025 Instructions for Schedule SE
• IRS — Self-employment tax (Social Security and Medicare)
• California FTB — Self-employed taxpayers

The definitions and examples on this page are for informational purposes only and do not constitute tax advice. Tax laws change frequently and individual circumstances vary. Consult a qualified tax professional before making decisions based on this content.