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Self-Employment Tax for Resellers

If you resell as a business, you likely owe self-employment tax on top of income tax. It's the part that surprises new sellers most. Here's how it works, a quick estimate, and how deductions shrink it.

Quick self-employment tax estimate

Net profit from reselling ($)Sales minus cost of goods sold and expenses

Self-employment tax: —
Half you can deduct: —
Per quarter (SE tax only): —

15.3% on 92.35% of net profit, no tax under $400 of profit, Social Security part capped at $184,500 (2026). Income tax is extra. An estimate, not tax advice.

What self-employment tax is

Employees split Social Security and Medicare tax with their employer. When you work for yourself, you pay both halves. That's self-employment tax.

15.3% in total: 12.4% Social Security plus 2.9% Medicare.
It applies to 92.35% of your net profit (a built-in allowance for the employer half).
You owe it once net profit from self-employment reaches $400 in a year.
The Social Security part stops at $184,500 of combined earnings for 2026. The Medicare part has no cap, and an extra 0.9% applies to high earners.
You can deduct half of your self-employment tax when working out your income tax.

Self-employment tax = net profit × 92.35% × 15.3%

A worked example

Example. Your reselling profit for the year is $12,000. Self-employment tax: $12,000 × 92.35% × 15.3% = $1,695.55. You can deduct half of that, $847.77, from your income. Income tax is on top.

Now say you'd forgotten to claim $1,740 of sourcing mileage. Claiming it drops your profit to $10,260 and your self-employment tax to $1,449.69, a saving of $245.86 before any income tax saving.

How to pay less, legally

Self-employment tax is charged on profit, so every legitimate business cost you record lowers it:

Track the cost of every item you resell, including the share of a lot. See the lot cost calculator.
Log business mileage: 72.5 cents a mile in 2026. Try the mileage deduction calculator.
Keep receipts for supplies, postage, fees and subscriptions. See the full deductions list.

When you pay it

There's no employer withholding it for you, so if you expect to owe $1,000 or more for the year, the IRS expects you to pay during the year in quarterly estimated payments. See quarterly taxes for resellers.

Common questions

Do resellers pay self-employment tax?

If reselling is a business and your net profit is $400 or more for the year, you generally owe self-employment tax of 15.3% on 92.35% of that profit, on top of income tax.

What is the self-employment tax rate for 2026?

15.3%: 12.4% for Social Security (on earnings up to $184,500 in 2026) and 2.9% for Medicare, applied to 92.35% of net profit.

How much self-employment tax on $12,000 of profit?

About $1,695.55 ($12,000 x 92.35% x 15.3%). Half of it, about $847.77, can be deducted from your income for income tax purposes.

How can I lower self-employment tax?

Record every legitimate business cost: cost of items sold, fees, shipping, supplies, mileage and subscriptions. The tax is charged on profit, so each deduction reduces it.

For information only, not tax advice. Tax rules depend on your situation and change over time. Check IRS.gov or ask a tax professional before you file. Rates checked October 2026.