Self-Employment Contributions Act

The Self-Employment Contributions Act (SECA) is a U.S. law that requires self-employed individuals to pay Social Security and Medicare taxes. Unlike traditional employees, who have these taxes automatically withheld from their paychecks, self-employed people must calculate and pay their own contributions. SECA ensures that self-employed workers contribute to these social insurance programs, which provide benefits during retirement, disability, or for survivors. The tax rate under SECA is typically higher because self-employed individuals pay both the employer and employee portions of the tax.