1099 & SELF-EMPLOYED TAXES
How Much to Set Aside for Taxes When You're Self-Employed (1099)
Short answer: set aside 25–30% of your net profit, and closer to 30–35% if you also have a job, earn well into six figures or live in a high-tax state. Nobody withholds tax from 1099 income, so you pay 15.3% self-employment tax plus income tax yourself. The next estimated payment for 2026 is due January 15, 2027. Work out your own percentage with the calculator below.
THE SHORT ANSWER
How much to set aside for taxes on 1099 income
The percentage depends on how much profit you make, your filing status, your state and whether you have other income. The table shows self-employment tax plus federal income tax (and a 5% state tax in the middle column) as a share of net profit for 2026, with the standard deduction and the 20% qualified business income deduction and no other income:
| Net profit (2026) | Single, no state income tax | Single, 5% state tax | Married filing jointly, spouse has no income |
|---|---|---|---|
| $30,000 | 17% | 22% | 14% |
| $50,000 | 19% | 24% | 16% |
| $75,000 | 21% | 26% | 18% |
| $100,000 | 22% | 27% | 19% |
| $150,000 | 25% | 30% | 21% |
| $200,000 | 27% | 32% | 22% |
That is why a flat 25–30% works as a starting rule: it covers most full-time freelancers in low-tax states with room to spare, and it is roughly right for side income. Then replace it with your own number from the calculator.
WHAT YOU PAY
What the money you set aside actually pays for
15.3%
12.4% Social Security + 2.9% Medicare, on 92.35% of net profit.
$184,500
The 12.4% part stops above this; the 2.9% Medicare part never does.
$16,100
Single. $32,200 married filing jointly, $24,150 head of household.
Up to 20%
Of qualified business income, made permanent by 2025 legislation.
Your set-aside covers three bills. Self-employment tax is the Social Security and Medicare an employer would normally split with you; as a freelancer you pay both halves. Federal income tax is figured on your profit minus half of the self-employment tax, the standard deduction and the qualified business income (QBI) deduction, at the regular 2026 brackets (10% up to $12,400 of taxable income for a single filer, 12% up to $50,400, 22% up to $105,700, then 24% and up). State income tax depends on where you live; nine states have no tax on wages and self-employment income.
SE tax = net profit × 92.35% × 15.3%
Taxable income = net profit − ½ SE tax − standard deduction − QBI deduction
The QBI deduction is 20% of your business profit (after the SE tax deduction), but never more than 20% of your taxable income. Above roughly $200,000 of taxable income ($400,000 for joint filers) extra limits can reduce it, especially for service businesses. Profit above $200,000 ($250,000 joint) also owes a 0.9% Additional Medicare Tax.
YOUR NUMBER
How much to set aside: 2026 calculator
TRY IT
What share of every payment to put away
Enter what you expect for all of 2026. Nothing you type is saved or sent anywhere. Results are estimates for planning, not a tax return.
How it works: 2026 brackets, standard deduction and the $184,500 Social Security cap from Form 1040-ES (2026). Federal income tax shown is the extra tax your business adds on top of your other income, so withholding from a job is not double-counted. State tax is a flat rate on net profit. Not included: itemized deductions, credits, retirement contributions, health insurance deduction, QBI limits at high incomes, and W-2 wages counting toward the Social Security cap.
$80,000 of 1099 income, $15,000 of expenses
A single freelance designer in a state with a 5% income tax, no other job. Net profit is $65,000.
Self-employment tax: $65,000 × 92.35% × 15.3% = $9,184. Half of that ($4,592) is deducted, and so is the $16,100 standard deduction, leaving $44,308. The QBI deduction takes off 20% of that ($8,862), so income tax is figured on $35,446: $4,006.
Add about $3,250 of state tax and the total is roughly $16,440: 25% of profit, or about 20.5% of every client payment. Four estimated payments of about $4,110.
- Net profit
- $65,000 $80,000 − $15,000
- SE tax
- $9,184 15.3% of 92.35%
- Federal income tax
- $4,006 After deductions
- State tax (5%)
- $3,250 Flat approximation
- Total to set aside
- $16,440 25% of profit
- From each payment
- 20.5% Of gross receipts
WHEN TO PAY
2026 estimated tax deadlines
If you expect to owe $1,000 or more when you file, the IRS expects the tax during the year, in four payments with Form 1040-ES, not all at once in April.
| Payment | Income earned | Due date |
|---|---|---|
| 1st | January 1 – March 31, 2026 | April 15, 2026 |
| 2nd | April 1 – May 31, 2026 | June 15, 2026 |
| 3rd | June 1 – August 31, 2026 | September 15, 2026 |
| 4th | September 1 – December 31, 2026 | January 15, 2027 |
You can skip the January 15, 2027 payment if you file your 2026 return by February 1, 2027 and pay everything due with it. Missed a payment earlier this year? Pay what you can now: the underpayment penalty works like interest, so it keeps growing until the money is in.
How to avoid the penalty
Pay at least 90% of your 2026 tax, or 100% of the tax on your 2025 return, whichever is smaller. If your 2025 adjusted gross income was over $150,000 ($75,000 married filing separately), the prior-year figure is 110%.
Last year's tax is your floor
If you were a W-2 employee in 2025, the safe harbor is based on last year's tax, which your employer already withheld. You may owe little or no penalty this year, but you still owe the full 2026 tax in April, so keep setting the money aside.
THE SYSTEM
How to set money aside for taxes, step by step
Open a separate savings account just for taxes
Money in your checking account looks like money you can spend. A separate high-yield savings account keeps it out of sight and earns some interest until the IRS takes it.
Move your percentage the day each payment lands
Use the share of gross from the calculator (or 25–30% until you know it). Doing it per payment, not at the end of the month, is what makes it stick when income is irregular.
Track income and expenses every month
Your set-aside is only as good as your profit number. Logging every invoice and receipt keeps the percentage honest and makes the year-end close fast; see our year-end bookkeeping checklist.
Pay from that account four times a year
On each deadline, pay the quarter's share through IRS Direct Pay or your IRS online account. Don't forget your state, which usually has its own estimated payments on similar dates.
Re-check the percentage every quarter
A big new client, new equipment or a move to another state changes the number. Rerun the calculator with your year-to-date figures and adjust.
Tracking it in Excel or Google Sheets
A simple income sheet with columns Date, Client, Amount and Set aside, plus a short summary, does most of the work:
| Question | Formula |
|---|---|
| Set aside for one payment | =[@Amount]*TaxRate |
| Net profit so far | =SUM(Income[Amount])-SUM(Expenses[Amount]) |
| SE tax so far | =MAX(0,NetProfit*0.9235*0.153) |
| This quarter's income | =SUMIFS(Income[Amount],Income[Date],">="&DATE(2026,9,1),Income[Date],"<="&DATE(2026,12,31)) |
| Saved vs. needed | =SUM(Income[Set aside])-TotalTaxEstimate |
Set TaxRate as a named cell, so changing it once updates every row. The formulas work the same in Excel and Google Sheets with Excel tables or named ranges.
AVOID THESE
Common mistakes with 1099 taxes
- !Setting aside from profit you haven't countedTaking a percentage of gross is fine; just make sure the rate comes from your real profit, not a guess.
- !Forgetting self-employment taxPeople in the 12% bracket often think they owe 12%. Add 15.3% SE tax and it is nearer 20–25%.
- !Ignoring the side-hustle effectWith a salary, freelance income starts at your top bracket, not at 10%.
- !Waiting for the 1099Tax is owed on everything you earned, with or without a 1099-NEC or 1099-K; the forms only report it.
- !Skipping the stateMost states with an income tax expect their own estimated payments.
- !Dipping into the tax accountIf you must borrow from it, write the IOU in your sheet and repay it before the next deadline.
READY-MADE TEMPLATE
Know your profit every month
The set-aside percentage is easy; knowing your real profit is the hard part. If you'd rather not build the income and expense tracking yourself, there is a ready-made bookkeeping spreadsheet for Excel and Google Sheets. Check the product page for current features.
Small Business Bookkeeping Spreadsheet Template for Excel & Google Sheets
The current listing describes an operations tracker with drop-down income and expense categories, a financial year dashboard with profit margins and top expense categories, sales channel analysis, monthly and yearly tax reports, and bank balances across accounts.
- Income and expenses by category
- Monthly and yearly profit dashboard
- Reports to hand to your accountant
The template tracks income, expenses and sales tax; it does not file or calculate your federal income tax. Product features and compatibility are listed on the product page and may change. Freelancer with irregular income? The Financial Tools for Freelancers bundle adds a budget-by-paycheck sheet and a client CRM.
Browse small business templatesFAQ
Questions about setting aside taxes
How much should I set aside for taxes on 1099 income?
25–30% of net profit is a safe starting point for most freelancers. Full-time freelancers with modest profits in states without income tax often need less (about 17–22%), while people with a salary on top, high earners and residents of high-tax states may need 30–35%. Use the calculator for your own percentage.
Should I set aside a percentage of gross income or net profit?
Tax is owed on net profit, but it is easier to move a fixed share of every payment you receive. Calculate the tax on your expected profit, divide by your expected gross income, and set aside that percentage of each payment.
What is the self-employment tax rate for 2026?
15.3%: 12.4% for Social Security on up to $184,500 of earnings and 2.9% for Medicare on all of them. It applies to 92.35% of your net profit, and half of it is deductible for income tax.
When is the next estimated tax payment due?
The fourth 2026 payment is due January 15, 2027. You can skip it if you file your 2026 return by February 1, 2027 and pay the whole balance with it. The first payment for 2027 is due in April 2027.
Do I have to pay quarterly taxes if I only freelance on the side?
If you expect to owe $1,000 or more after withholding, yes, or you may owe an underpayment penalty. An alternative is to raise the withholding at your job (new Form W-4) to cover the freelance tax, since withholding counts as paid evenly through the year.
What happens if I don't set aside enough?
You still owe the full tax when you file in April, plus an underpayment penalty if you missed the safe harbor. If you can't pay in full, file on time anyway and ask the IRS for a payment plan; the failure-to-file penalty is much larger than the failure-to-pay penalty.
Sources and further reading
- IRS: Form 1040-ES (2026), Estimated Tax for Individuals: due dates, 2026 tax rate schedules, standard deduction, 92.35% rule, $184,500 wage base, safe harbor and QBI changes
- IRS: Estimated taxes
- IRS: Self-employment tax (Social Security and Medicare taxes)
- IRS: Tax inflation adjustments for tax year 2026 (IR-2025-103)
- IRS: Qualified business income deduction
- Social Security Administration: 2026 Social Security changes
Checked October 9, 2026. Percentages in the table and example are our calculations from these figures, rounded. The 2027 wage base and tax brackets are announced in the fall; this article will be updated for 2027. General information, not tax advice.
