# How does self-employment income affect my Social Security and taxes after 60?

Canonical: https://theretirementdecisionlab.com/answers/how-does-self-employment-income-affect-my-social-security-and-taxes-after-60/
Section: Should you stop earning? (Retirement Decision Lab, Decision 2 · Week 2 · Wed Nov 11)
Facts checked: 2026-10-06 · Next review by: 2027-01-15
Reviewed by: Todd Allyn, Founding Director, Sovereo Intelligence Research

## Short answer

You owe 15.3% self-employment tax once net earnings reach $400, even while collecting Social Security. Those earnings can raise your benefit, and if you claimed before full retirement age, they count toward the 2026 earnings test.

## Detail

Self-employment tax is 12.4% for Social Security plus 2.9% for Medicare, 15.3% in total. It applies once net earnings reach $400, even if you already receive Social Security benefits. The tax is figured on 92.35% of net earnings, and you can deduct half of it when figuring adjusted gross income. In 2026 the Social Security part stops at $184,500 of combined wages and self-employment earnings. Higher earners may also owe a 0.9% Additional Medicare Tax.

Example: $30,000 of net profit. 92.35% of that is $27,705. At 15.3%, the tax is about $4,239, and about $2,119 of it is deductible. This is on top of regular income tax.

The tax buys something. Self-employment earnings earn Social Security credits the same way wages do, one credit per $1,890 in 2026, up to four a year. They also go into your earnings record, so a strong year can replace a low year in your highest 35 and raise your benefit.

If you claimed before full retirement age, the earnings test counts only your net earnings from self-employment, not gross receipts, and that income counts when you receive it. SSA also looks at hours: in general, more than 45 hours a month in your business means you are not retired, and fewer than 15 means you are.

What the rule of thumb misses: as an employee you paid half of this tax and your employer paid the rest. Working for yourself, you pay both halves, so the same gross pay nets less.

## Where it gets personal

In Week 2 you run your own projected business income through the tax and the earnings test to see what you actually keep. The Retirement Decision Lab: https://theretirementdecisionlab.com/

## Sources

1. 2026 Social Security Changes: Cost-of-Living Adjustment Fact Sheet, Social Security Administration: https://www.ssa.gov/news/en/cola/factsheets/2026.html
2. Topic no. 554, Self-employment tax, Internal Revenue Service: https://www.irs.gov/taxtopics/tc554
3. How Work Affects Your Benefits, Social Security Administration: https://www.ssa.gov/pubs/EN-05-10069.pdf
4. How You Earn Credits, Social Security Administration: https://www.ssa.gov/benefits/retirement/planner/credits.html

Education only. Not financial, tax, investment, immigration or legal advice.
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