CashoutGlossary / Deductible part of self-employment tax
Deductible part of self-employment tax
An adjustment that subtracts half of your self-employment tax from your income, lowering your AGI and income tax but not the self-employment tax.
When you work for yourself, you pay both halves of Social Security and Medicare through self-employment tax. You can then deduct the employer-equivalent half when figuring your adjusted gross income.
On the 2026 draft forms, Schedule SE line 13 multiplies your self-employment tax by 50%, and that amount goes on Schedule 1 line 15, "Deductible part of self-employment tax." Schedule 1's adjustments then come off your income on Form 1040 line 10, before adjusted gross income on line 11a.
Because it's an adjustment to income, it comes before the choice between the standard deduction and itemizing, so you get it either way. A lower AGI can also help with limits tied to income, such as the No Tax on Tips phase-out, which starts at $150,000 of modified AGI ($300,000 joint) and is figured from AGI.
Common mistake: thinking it cuts the self-employment tax bill in half. It only lowers income tax. On $3,000 of self-employment tax you deduct $1,500 from income. In the 12% bracket that saves $180, and you still owe the full $3,000 of self-employment tax.
Related terms
Self-employment tax · Schedule SE · Form 1040 · Tax bracket
