Can I deduct half my Self-Employment Tax?

Yes — and this is one of the most important above-the-line deductions for self-employed individuals. You can deduct exactly half of your self-employment tax on Form 1040, Schedule 1, Line 15. This deduction reduces your Adjusted Gross Income (AGI) — which in turn reduces your federal income tax. It does NOT reduce your SE Tax itself. **Why does this exist?** When you're self-employed, you pay both the employer and employee halves of FICA (7.65% + 7.65% = 15.3%). Employees don't pay the employer half — it's pre-tax for them. The IRS gives self-employed individuals an equivalent deduction for the employer half to level the playing field. **Example:** If your SE Tax for 2025 is $11,304, you deduct $5,652 on Schedule 1 Line 15. If you're in the 22% federal bracket, this saves you approximately $1,243 in federal income tax. This deduction is automatic — it flows directly from Schedule SE to Schedule 1. You don't need to do anything special to claim it.

• Deduct exactly half of SE Tax on Schedule 1 Line 15
• Reduces AGI — reduces your federal (and often state) income tax
• Does NOT reduce SE Tax — just reduces income tax
• Automatic — flows from Schedule SE calculation
• For $80,000 net profit, half SE deduction is approximately $5,652