What is the self-employment tax deduction for half of the tax?

When you're self-employed you pay both the employee and employer halves of Social Security and Medicare — about 15.3% — through self-employment tax. To partly offset that, the IRS lets you deduct half of your self-employment tax as an above-the-line adjustment to income. This mirrors how an employer's share isn't taxable to a W-2 worker. The deduction reduces your income tax (not the self-employment tax itself), and you get it whether or not you itemize. It's calculated automatically on Schedule SE and flows to Schedule 1, so any decent tax software handles it — but it's worth understanding so you don't overestimate your true tax burden. On, say, $100,000 of net profit you'd owe roughly $14,000 in self-employment tax and could deduct about $7,000 of it against income. Remember this when setting aside money for taxes.