How Much to Set Aside for Taxes on 1099 Income

Updated 2026-10-14 · Not tax advice

Figures used: The examples use 2026 federal brackets and deductions, which are also used in the current Keelsheet workbooks.

Free: the one-page Q4 2026 estimated tax worksheet (printable, Excel or Google Sheets) and the quarterly estimated tax calculator.

Freelance payments usually arrive without tax withheld. Start with your business profit: what you earn after deductible expenses. The examples here cover income from self-employment.

Estimate what you will owe

1. Self-employment tax. 15.3% on 92.35% of net profit, which is about 14.13% of profit. The Social Security part stops at the wage base ($184,500 for 2026). W-2 Social Security wages use that cap first, so a side business can owe less than 14.13% of profit in regular self-employment tax. Source: IRS Topic 554.
2. Federal income tax. Add other taxable income to your profit, then account for deductions. Federal rates apply in layers as taxable income rises. Deductions can include half of regular self-employment tax, your standard or itemized deduction, and the qualified business income deduction for eligible business income (IRS Publication 505).
3. State income tax. 0% in states with no income tax, and more elsewhere. Check your state revenue department.

Quick guide (federal only, single filer, 2026 figures)

Net profit	Approx. federal share
$30,000	~17%
$80,000	~21%
$150,000	~25%

These examples assume a single filer under 65 with only business income, the standard deduction, an eligible qualified business income deduction, and no tax credits or other adjustments. Adding wages or changing deductions changes the result. Run your own numbers in the 1099 set-aside calculator.

Worked example: $80,000 profit, single

Using those assumptions, self-employment tax is $11,303.64 and federal income tax is about $5,343.83. Together they total $16,647.47, about 21% of profit. See the full calculation.

If you also budget 5% of profit for state tax, your combined set-aside would be about 26%. Calculate that allowance using your state rules. A published state tax rate alone does not tell you the share of profit you will owe.

Make it a habit

• Move your set-aside percentage into a separate savings account every time a client pays you.
• Pay it out as quarterly estimated taxes (due dates). The final payment for 2026 is due Jan 15, 2027.
• Recalculate each quarter as your income changes.
• Moving off QuickBooks Self-Employed? See QuickBooks Self-Employed alternatives for 2027 for apps and spreadsheets that still estimate quarterly tax.
• Lower the profit you set aside on by recording every expense: Schedule C expense categories and a Schedule C template for Excel or Google Sheets.
• First year as a 1099? See do you have to pay quarterly taxes your first year.
• Shopping for Instacart? See Instacart taxes for full-service and in-store shoppers.
• Delivering for DoorDash? See DoorDash quarterly taxes for mileage, the tips deduction and a worked example.
• Want the exact IRS method? Walk through the Form 1040-ES Estimated Tax Worksheet.
• Want a spreadsheet that does this math every quarter? See the best quarterly estimated tax spreadsheet for freelancers.

FAQ

What percentage of 1099 income should I save for taxes?

Start by testing a set-aside of 25–30% of net profit against your own tax estimate. Your income, filing status, deductions and state determine whether that amount is enough.

Is self-employment tax on top of income tax?

Yes. Self-employment tax (Social Security and Medicare) is separate from federal income tax. Below the Social Security wage cap, it is about 14.1% of profit when wages have not used any of that cap. Half of regular self-employment tax is deductible when figuring income tax.

Do I set aside from gross or net income?

Taxes are figured on net profit (income minus deductible business expenses), so saving a share of each payment after expected expenses is more accurate. Saving from gross is simpler and more conservative.