23 — Other Taxes from Schedule 2 Updated for tax year 2025

What this line means

Additional taxes from Schedule 2, Part II that are added to your tax after credits. The most common are self-employment tax, the Additional Medicare Tax (0.9% on high earnings), the Net Investment Income Tax (3.8% on investment income above thresholds), and the tax on early distributions from retirement accounts. These taxes exist outside the regular income tax system.

Does this apply to you?

• You are self-employed with net earnings above $400 (self-employment tax)
• You have wages plus self-employment income exceeding $200,000 single / $250,000 MFJ (Additional Medicare Tax)
• You have investment income and your modified AGI exceeds $200,000 single / $250,000 MFJ (Net Investment Income Tax)
• You took an early distribution from a retirement account before age 59½ (10% penalty)
• You owe household employment taxes for a nanny or housekeeper

Easy to overlook

Self-employment tax is in addition to income tax Self-employment tax (15.3% on 92.35% of net self-employment earnings up to the $176,100 wage base, then 2.9% above that) is separate from the income tax calculated on lines 16-22. A freelancer with $80,000 in net business income owes approximately $11,300 in self-employment tax on top of their regular income tax. This catches first-time freelancers off guard every year. ¹ [SOURCE: General filing pattern — self-employment tax not anticipated]

The Net Investment Income Tax adds 3.8% on top of capital gains rates Investment income (capital gains, dividends, rental income, interest) above $200,000 AGI (single) or $250,000 (MFJ) gets hit with an additional 3.8% surtax. This means long-term capital gains that you thought were taxed at 15% or 20% are actually taxed at 18.8% or 23.8% once the NIIT kicks in. ² [SOURCE: IRS Schedule 2, Part II instructions — Other Taxes]

Watch out for this

Not making estimated tax payments to cover self-employment tax. W-2 employees have FICA taxes withheld automatically, but self-employed filers must pay self-employment tax through quarterly estimated payments. Failing to make these payments results in an underpayment penalty on line 38, even if you pay the full amount at filing time.

Related lines on your return

• Line 22 — Form 1040 — Tax after credits; line 23 is added to this
• Line 24 — Form 1040 — Total tax; the sum of lines 22 and 23
• Schedule SE — Form 1040 — Self-employment tax calculation