Self-employment tax is a tax that individuals who work for themselves must pay. This tax covers Social Security and Medicare contributions, which are typically withheld from employees' paychecks by their employers. Self-employed individuals must calculate and pay this tax themselves, usually through quarterly estimated tax payments. The self-employment tax rate is currently 15.3%, which includes 12.4% for Social Security and 2.9% for Medicare. If a self-employed person's net earnings exceed a certain threshold, they may also be subject to an additional 0.9% Medicare tax. Understanding self-employment tax is essential for anyone considering self-employment.