What is the self-employment tax rate for Social Security?

The self-employment tax rate for Social Security is indeed 12.4%. This rate is specifically designated for Social Security contributions and is part of the larger self-employment tax that also includes Medicare taxes. The self-employment tax is imposed on net earnings from self-employment, and it functions similarly to the payroll taxes that employees pay which fund Social Security and Medicare programs.

To elaborate, the 12.4% rate is applied to self-employed individuals' earnings up to a certain income cap, which is subject to change each year based on wage growth. This specific rate only covers the Social Security portion, while the overall self-employment tax rate, which also includes the Medicare portion, totals 15.3%. Understanding that the 12.4% rate aligns with Social Security contributions helps clarify the funding structure of this vital program for self-employed individuals.