What’s new for Social Security and Medicare in 2021
Double tax for self-employed
Self-employed individuals pay both the employer and employee share of the payroll tax. The 15.3% self-employment rate consists of two parts: 12.4% for Social Security and 2.9% for Medicare. In 2021, the combined rate is applied to the first $142,800 income and the 2.9% Medicare portion applies to all income. Self-employed individuals can deduct the employer portion of their payroll taxes to calculate their adjusted gross income for income tax purposes.