Self-employment tax is a type of tax that self-employed individuals must pay. It is calculated by multiplying your net income by the self-employment tax rate. The self-employment tax rate is 15.3%, which is divided into two parts: 12.4% for social security and 2.9% for Medicare.
Self-employment tax is important because it helps to fund Social Security and Medicare benefits. Social Security provides retirement, disability, and survivor benefits, while Medicare provides health insurance for people over the age of 65.
