Self-Employment Tax in Maryland (2026)

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 6, 2026 · Last updated Aug 6, 2026

Self-employment tax is a federal 15.3% tax — 12.4% Social Security up to the annual wage base plus 2.9% Medicare — on your net self-employment earnings, reported on Schedule SE. Maryland has no separate SE tax, but those earnings also face Maryland state income tax and a local county income tax.

What Self-Employment Tax Is

Self-employment (SE) tax funds Social Security and Medicare for people who work for themselves — sole proprietors, partners, and members of an LLC taxed as a partnership or sole proprietorship. It is a federal tax, not a Maryland tax, and it replaces the payroll taxes an employer and employee would otherwise split. The combined rate is 15.3% on net earnings from self-employment.

That 15.3% breaks into 12.4% for Social Security, which applies only up to the annual Social Security wage base, and 2.9% for Medicare, which has no cap. You report it on Schedule SE. If you run a Maryland sole proprietorship or single-member LLC, this tax applies to your business profit.

How to Calculate It

You calculate SE tax on your net earnings, not gross revenue. First subtract business expenses to reach net profit (Schedule C). SE tax generally applies to 92.35% of that net profit. Multiply by 15.3% up to the wage base for the Social Security portion, then 2.9% Medicare on the full amount. You may deduct one-half of the SE tax as an above-the-line income adjustment.

High earners also pay an Additional Medicare Tax of 0.9% on wages and SE income above $200,000 (single) or $250,000 (married filing jointly). Our self-employment tax calculator automates the math, and the business tax overview puts it in context.

Maryland State Income Tax

Maryland does not levy a separate self-employment tax, but your net self-employment earnings flow into your Maryland state income tax. Maryland uses graduated state rates administered by the Comptroller of Maryland. Because self-employment income is not withheld, you account for it when you file your Maryland return and through estimated payments.

Self-employed Marylanders report business income on the Maryland return that mirrors the federal figures. Keeping good records and reconciling to your federal Schedule C and Schedule SE makes the state filing straightforward. See Maryland LLC tax filing for entity-level detail.

Maryland Local (County) Income Tax

A distinctive feature of Maryland is the local income tax: every Maryland county and Baltimore City levies its own income tax on residents, collected together with the state tax. The local rate varies by jurisdiction and is applied to your Maryland taxable income, including self-employment earnings. This "piggyback" tax means self-employed residents effectively pay both a state and a county rate.

Because the local tax rides on the state return, you do not file separately for it, but you should account for it when estimating what you owe. The combined state-plus-local burden is why Maryland self-employed taxpayers should budget carefully for quarterly payments.

Estimated Quarterly Payments

Since no employer withholds tax from self-employment income, you generally must make quarterly estimated payments to both the IRS and Maryland to avoid underpayment penalties. Federal estimates use Form 1040-ES, due in April, June, September, and January. Maryland estimated payments use the state's Form PV voucher on a comparable schedule.

Estimate based on expected net earnings, including both SE tax and income tax (state and county). If your income fluctuates, recompute each quarter. Setting aside a percentage of each payment you receive is a practical way to stay current. See the IRS estimated taxes guidance for safe-harbor rules.

Entity Choices That Affect SE Tax

SE tax applies to a sole proprietor's and a partnership member's share of business earnings. Forming an LLC by itself does not change this — a single-member LLC is disregarded and its profit is still subject to SE tax. Electing S-corporation treatment can change the picture: an S-corp owner takes a reasonable salary (subject to payroll taxes) and may take remaining profit as distributions not subject to SE tax.

The S-corp route adds payroll and compliance costs and requires reasonable compensation, so it is not automatically better. Compare options in S-corporation vs LLC and confirm the numbers before electing. Maryland recognizes the federal S election for its income tax.

Deductions, Records, and Planning

Because self-employment tax is calculated on net profit, every legitimate business deduction you capture reduces both your income tax and your SE tax. Track ordinary and necessary expenses — supplies, mileage, a qualifying home office, software, and self-employed health insurance — and keep documentation. Disciplined bookkeeping is the simplest way to lower the tax legally.

Remember the deduction for one-half of SE tax. You subtract half of your self-employment tax as an adjustment to income on your federal return, which also flows through to your Maryland taxable income. This partially offsets the employer-side portion of the tax and is easy to miss if you calculate by hand.

Coordinate federal and Maryland estimates. Underpaying either can trigger penalties, so base your quarterly payments on expected net earnings and include the SE tax, federal income tax, and Maryland state and county income tax. Maryland's local piggyback tax means your effective state rate is higher than the state schedule alone suggests.

Consider retirement contributions. Self-employed Marylanders can use vehicles like a SEP-IRA or solo 401(k) to reduce taxable income while saving, though these reduce income tax rather than SE tax. Balancing current tax, retirement saving, and cash flow is part of a sound self-employment plan. Our business tax overview covers the broader picture.

Revisit your entity structure as income grows. A default S-corporation election can, for some owners, convert part of SE-taxed profit into distributions not subject to SE tax, at the cost of payroll and added filings. Model the numbers with a CPA before electing, and see S-corp election in Maryland for how the election works.

Map your total effective rate before you set aside money for taxes. A self-employed Marylander faces federal income tax, the 15.3% self-employment tax, Maryland state income tax, and a county income tax stacked on top. Adding these together, the share of each dollar of profit owed in tax is higher than any single rate suggests, so set your savings percentage accordingly.

Use safe-harbor rules to avoid underpayment penalties. Paying at least the required percentage of last year's or this year's liability through timely quarterly estimates generally shields you from penalties even if your income rises. Because self-employment income is uneven, recompute your estimate each quarter and adjust the remaining payments rather than guessing once in April.

Keep meticulous records to substantiate deductions and the SE-tax computation. Separate business banking, contemporaneous mileage logs, and organized receipts turn ambiguous expenses into defensible deductions that lower both income and self-employment tax. Good records also make the Maryland return, which mirrors your federal figures, quick to complete and easy to defend.

Revisit your structure and retirement plan annually. As profit climbs, an S-corporation election or a larger retirement contribution can meaningfully change your tax picture, though each carries trade-offs in cost and complexity. Reviewing the numbers each year with a professional keeps your plan aligned with your income. See S-corp election in Maryland.

Frequently Asked Questions

What is the self-employment tax rate in Maryland?

The self-employment tax is a federal 15.3% (12.4% Social Security up to the wage base plus 2.9% Medicare). Maryland has no separate SE tax, but your earnings face Maryland state and local county income tax.

Does Maryland have its own self-employment tax?

No. Self-employment tax is federal. Maryland taxes self-employment income through its state income tax plus a local county income tax collected on the same return.

How is self-employment tax calculated?

It applies to about 92.35% of your net business profit: 12.4% Social Security up to the wage base and 2.9% Medicare with no cap. You can deduct half of the SE tax on your federal return.

Do I have to make estimated payments in Maryland?

Usually yes. Because no one withholds tax from self-employment income, you make quarterly federal (Form 1040-ES) and Maryland (Form PV) estimated payments to avoid penalties.

Can an S-corp election reduce my self-employment tax?

It can. An S-corp owner pays payroll taxes on a reasonable salary and may take remaining profit as distributions not subject to SE tax, but it adds payroll and compliance costs.

Related

• Self-employment tax calculator
• Sole proprietorship in Maryland
• Maryland LLC tax filing
• S-corp election in Maryland
• Business tax overview
• S-corp vs LLC

Sources

1. IRS — Self-Employment Tax (Social Security and Medicare Taxes) (15.3% combined rate; $400 threshold).
2. IRS — About Schedule SE (Form 1040) (computing self-employment tax).
3. IRS — Estimated Taxes (quarterly payment due dates).
4. IRS — About Form 1040-ES (Estimated Tax for Individuals).
5. IRS — Additional Medicare Tax (0.9% above threshold).
6. Social Security Administration — Contribution and Benefit Base ($176,100 Social Security wage base for 2025; adjusted annually).
7. Cornell LII — 26 U.S.C. § 1401 (rate of self-employment tax).
8. Cornell LII — 26 U.S.C. § 1402 (definition of net earnings from self-employment).
9. Comptroller of Maryland — Individual Income Tax (Maryland state income tax).
10. Comptroller of Maryland — Maryland Income Tax Rates (state and local county rates).
11. Comptroller of Maryland — Estimated Personal Income Tax (Form PV; quarterly payments).
12. Comptroller of Maryland — Business Taxes (registration and returns).
13. IRS — S Corporations (federal S-corporation rules).
14. IRS — Paying Yourself (S-corp reasonable compensation).
15. IRS — About Schedule C (Form 1040) (report sole-proprietor profit or loss).

LegalGlass provides general information for educational purposes and is not a law firm or a substitute for advice from a licensed attorney or tax professional. Laws, fees, and thresholds change; verify current requirements with the IRS and the Comptroller of Maryland before acting.