If you're employed, your employer pays for part of your Social Security and Medicare taxes, but as your own boss, you pay it all. In 2013, the IRS reports the rate is 12.4 percent for Social Security and 2.9 percent for Medicare, making a total of 15.3 percent self-employment tax. Since the IRS requires taxes to be paid at the time the income is earned, you may be subject to a penalty if you do not pay enough by the due date each quarter.