Self Employed Tax

Meaning & Definition

What is Self Employed Tax

Self-employment tax is a tax that individuals who work for themselves are required to pay. It covers Social Security and Medicare taxes and is intended to mirror the taxes that employers withhold from the pay of their employees. The self-employment tax rate is higher than the combined employee and employer rates for Social Security and Medicare, reflecting the responsibility of self-employed individuals to cover both the employer and employee portions of these taxes.