Self-Employment Tax in California (2026)
Federal Self-Employment Tax (Applies to All States Including CA)
The federal self-employment tax is 15.3% on the first $168,600 of net SE income (2024), composed of 12.4% Social Security and 2.9% Medicare. Above $168,600, the 2.9% Medicare portion continues. An additional 0.9% Medicare surtax applies to SE income over $200,000 (single) or $250,000 (married joint).
Self-employed individuals can deduct half of their SE tax (7.65%) from gross income before calculating federal and state income tax.
California State Income Tax on Self-Employment Income
Self-employed Californians pay state income tax on net earnings plus an 8.84% California franchise minimum tax for corporations and LLCs. LLCs also owe an $800 annual minimum franchise tax plus a fee on gross receipts over $250,000.
In California, net self-employment income is taxed as ordinary income at up to 13.3% (graduated rate system).
Quarterly Estimated Tax Payments for California Self-Employed
Self-employed California residents typically must make quarterly estimated tax payments to both the IRS (due Apr 15, Jun 15, Sep 15, Jan 15) and the California Department of Revenue. Underpayment can trigger penalties.
Deductions Available to California Self-Employed
- Half of federal SE tax (7.65%) — deductible above-the-line on federal return
- Home office deduction (if qualifying dedicated workspace)
- Health insurance premiums (100% deductible for self-employed if not eligible for employer plan)
- SEP-IRA or Solo 401(k) contributions — up to 25% of net SE income
- Business expenses: equipment, software, vehicle mileage (67 cents/mile in 2024), professional fees
Frequently Asked Questions
What taxes do self-employed people pay in California?
Self-employed California residents pay: (1) federal self-employment tax of 15.3% on net SE income up to $168,600; (2) federal income tax on net earnings; and (3) California state income tax at up to 13.3%. Self-employed Californians pay state income tax on net earnings plus an 8.84% California franchise minimum tax for corporations and LLCs. LLCs also owe an $800 annual minimum franchise tax plus a fee on gross receipts over $250,000.
What is the self-employment tax rate in 2026?
The federal SE tax rate is 15.3% on the first $168,600 of net self-employment income (2024). Above that, only the 2.9% Medicare portion continues. An additional 0.9% Medicare surtax applies above $200,000 (single). This applies to all self-employed individuals regardless of state, including California.
Can I deduct the self-employment tax in California?
Yes. Half of your federal SE tax (7.65%) is deductible as an above-the-line deduction on your federal return, reducing your federal and state taxable income. In California, this deduction also reduces your state taxable income, saving you up to 13.3% of the deducted amount.
Do I need to make quarterly estimated tax payments in California?
Yes, if you expect to owe more than $1,000 in federal taxes for the year. California also requires estimated payments if state tax owed exceeds $500. Payment due dates are typically April 15, June 15, September 15, and January 15.