If you are self-employed, you are responsible for paying both the employer and employee portions of Social Security and Medicare taxes, and you must make estimated tax payments quarterly. Unlike a traditional employee, you are your own bookkeeper, requiring you to track income and expenses to determine your taxable profit.

Self-employment tax

Tax rate: The total self-employment (SE) tax rate is 15.3%, which consists of 12.4% for Social Security and 2.9% for Medicare.

Net earnings: This 15.3% is applied to 92.35% of your net self-employment earnings, not your total revenue. The 92.35% figure is used because it is equivalent to deducting the 7.65% that an employer would normally pay for an employee.

Income cap: For 2025, the Social Security portion (12.4%) only applies to the first $176,100 of your combined wages and self-employment income. The Medicare portion (2.9%) has no income limit.

Estimated taxes

As a self-employed individual, you do not have an employer to withhold taxes from your paycheck, so the IRS requires you to make tax payments quarterly.

Payment schedule: Estimated taxes are typically due on April 15, June 15, September 15, and January 15 (of the following year).

Why having more than one W-2 can lead to higher taxes

When you work multiple jobs during a tax year, you may end up with more than one W-2. This can affect your final tax liability in several ways:

1) Progressive tax rates and tax brackets

The U.S. federal income tax uses a progressive rate structure: portions of your taxable income are taxed at increasing rates.

If you add income from a second job, your total taxable income increases. Even though each employer withholds tax separately, the combined effect can push you into higher tax brackets or reduce the benefit of deductions and credits that phase out at higher income levels.

2) Withholding may be insufficient or inefficient

Each employer withholds based on the information you provide (usually via Form W-4). If you don’t adjust your W-4 withholdings after starting a second job, each employer might withhold only enough to cover their portion of your income, not your total tax liability.

Example: Job A withholds at a single filing status with standard deductions, and Job B does the same. Together, the withholdings may be too low to cover the total taxes owed on your combined income.

3) Standard deduction and phaseouts