If I am self-employed?

Question

What is the highest tax bracket for a self-employed person? Is 35% correct? Geez I hope not!

Answer 1

35% is correct. But sorry to inform you that there are additional taxes on top of that tax rate. There is self-employment tax, which is 15.3% of 92.35% of net self-employment income. The good news is that if you make more than $97,500 of net self-employment income the rate changes from 15.3% to 2.9% as social security tax stops once you hit $97,500 in earned income. Oh, I almost forgot, you would possibly have state income taxes on top of the 35% rate, and the self-employment tax rate, if you live in a state with a state income tax. But, on the bright side, the total taxes together aren't 100% of your income.

Answer 2

35% for federal income tax is correct, but you aren't there unless your taxable income is several hundred thousand dollars. Tax rates are the same for self-employment, income as an employee, or most other types of income.

If you are self-employed, you'll also pay around 15% for social security and medicare, rather than the 7.65% you'd pay as an employee - if you are an employee, the employer pays half.

Answer 3

Yes it is. However, there is an additional self employment tax of 15.3% to cover your and your employers (in this case, you) social security taxes.

Answer 4

Yeah, what they said. I'm tired.