Self-employment tax for gig drivers, explained

The two pieces of the 15.3%

Per the IRS's own explanation: Tax Topic 554 states "the self-employment tax rate as a percentage of your net earnings from self-employment...consists of 12.4% for Social Security...and 2.9% for Medicare taxes." Together, 15.3%. This exists because as a self-employed driver, you're both the "employee" and the "employer" — a W-2 job splits FICA 7.65%/7.65% between you and your employer; self-employment collects the whole 15.3% from you directly.

Why 92.35%, not 100%

Schedule SE has you multiply net earnings by 92.35% before applying the 15.3% rate. This isn't a rounding quirk — it exists to put self-employed and W-2 workers on comparable footing. A W-2 employee never pays income or FICA tax on their employer's 7.65% matching contribution; the 92.35% adjustment (100% − 7.65%) recreates that same effect for someone who is, in effect, both halves of the employment relationship.

On $40,000 of net earnings, that means self-employment tax is calculated on $36,940 (92.35% of $40,000), not the full $40,000 — a real, if modest, reduction before the 15.3% rate is even applied.

The Social Security cap — and why Medicare has none

The 12.4% Social Security portion only applies up to an annual wage base: $184,500 for 2026. Earn more than that from all sources combined (W-2 wages plus self-employment net earnings), and the Social Security portion stops on the excess. The 2.9% Medicare portion has no cap at all — it applies to every dollar of net earnings, however high.

Above certain thresholds, an additional 0.9% Medicare tax applies on top: $250,000 for married filing jointly, $200,000 for single or head of household, $125,000 for married filing separately, per the IRS's self-employment tax page. Almost no driver hits this from gig income alone, but it matters if gig income stacks on top of a high-earning spouse or a separate high-paying job.

The part that softens the blow: half is deductible

You can deduct the "employer-equivalent" half of your self-employment tax when calculating adjusted gross income — this is an income-tax deduction, not a reduction of the self-employment tax itself. It's calculated automatically on Schedule SE and carried to Schedule 1. In effect, you pay the full 15.3% into Social Security and Medicare, but your income tax bill is computed as though half of that payment never happened.

Who has to file it

Per Tax Topic 554: "You usually must pay self-employment tax if you had net earnings from self-employment of $400 or more." That threshold is low by design — almost any driver who's put in more than a handful of shifts crosses it.

Where mileage fits in

Self-employment tax is calculated on net earnings — gross platform pay minus deductible business expenses, mileage included. Every dollar of legitimate mileage deduction lowers not just income tax but self-employment tax too, at the full 15.3% (on 92.35% of it). This is the reason a mileage deduction is worth roughly 18–29¢ per mile for most drivers rather than the full 72.5¢/76¢ IRS rate in cash — see what a deduction is actually worth for the fuller math. It's also why underclaiming mileage costs you on two taxes at once, not just one.