Half-Tax Deduction

Category: tax

A tax deduction allowing self-employed individuals to deduct 50% of the self-employment tax they pay.

Since the employer would normally pay half the Social Security tax, the IRS allows you to deduct that employer-equivalent half from your total income before calculating your taxes. It is a small but important "break" for the solo entrepreneur.

Common Examples

• The tax software automatically calculated our half-tax deduction based on the total self-employment taxes reported on Schedule SE.
• This deduction helps partially offset the burden of paying the full employer/employee share of the Social Security and Medicare burden.