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How much of your 1099 income should you set aside for taxes?

Set aside enough to cover self-employment tax plus the income tax on your net profit, which for many people is a larger share than their tax bracket suggests. Work the number out from profit after expenses and not from what clients paid you.

Free, no account. Checked October 22, 2026.

Start from net profit

A 1099 form shows what a client paid you. Your tax is based on net profit, which is that income minus the ordinary and necessary expenses of the work.

A tax bill follows profit, so track expenses through the year. A missed expense raises the tax.

Self-employment tax comes first

The amount subject to self-employment tax is 92.35% of your net earnings. The rate is 12.4% for Social Security plus 2.9% for Medicare, which is 15.3% in all.

For 2026 the Social Security part applies to the first $184,500 of earned income, and wages from a job count toward that same limit. The Medicare part applies to all net earnings. You generally owe the tax once net earnings reach $400.

You can deduct one-half of the self-employment tax when you figure your adjusted gross income.

Income tax goes on top

After that deduction, income tax uses the normal brackets. For 2026 the standard deduction for a single filer is $16,100. The brackets for a single filer are 10% up to $12,400 of taxable income and 12% from there to $50,400, then 22% to $105,700.

The qualified business income (QBI) deduction can lower income tax for many self-employed people. The examples below leave it out, so they can run higher than your bill.

Quarterly due dates for 2026

Estimated payments for tax year 2026 are due April 15, 2026, June 15, 2026, September 15, 2026 and January 15, 2027. You can skip the January payment if you file your return by February 1, 2027 and pay the full balance with it.

In most cases you must pay estimated tax if you expect to owe at least $1,000 for the year after withholding and refundable credits. If you also have a job, withholding counts toward what you owe.

The safe harbor rule

You avoid the underpayment penalty if your payments and withholding reach the smaller of 90% of this year's tax or 100% of last year's tax. If your adjusted gross income last year was more than $150,000, or $75,000 for married filing separately, the prior-year figure is 110%.

The prior-year route helps when income jumps, since you can pay on last year's number and settle the rest when you file.

A worked example

Sample, not your numbers

Three levels of net profit, single filer, no other income

Sample numbers, not yours. Each row is 2026 federal tax on the net profit shown, with no job, no QBI deduction and no state tax.

$24,000 profit: total tax, share of profit
$4,012, about 17%
$24,000 profit: each quarterly payment
$1,003
$60,000 profit: total tax, share of profit
$12,989, about 22%
$60,000 profit: each quarterly payment
$3,247
$100,000 profit: total tax, share of profit
$25,745, about 26%
$100,000 profit: each quarterly payment
$6,436

At $24,000 of profit, self-employment tax is $3,391 of the $4,012. Because the share grows with profit, one flat percentage can set aside too little at higher profit.

Run your own numbers

Enter your expected net profit and see the 2026 self-employment tax, the income tax, each quarterly payment and the safe-harbor amount.

Common questions

Do I have to pay quarterly?

In most cases yes, if you expect to owe at least $1,000 for 2026 after withholding and refundable credits. If you owe less than that, you can pay when you file.

What happens if I miss a payment?

You may owe a penalty for underpaying your tax. Meeting the safe-harbor amount avoids it, so check that rule before you skip a date.

Is the share different in my state?

Yes. These figures are federal only. Many states add their own income tax, so add that to your set-aside.

Where should I keep the money?

Many people use a separate savings account so the tax money stays apart from spending money. Move your set-aside there each time a client pays.

Go further in the course

Chapters 1 to 3 are free, no card needed. Chapter 3 helps you plan irregular income, which is the hard part of 1099 work.

Keep reading

Sources

Figures checked on October 22, 2026. The examples cover tax year 2026, a single filer, federal tax only, with no QBI deduction, credits, other income or state tax, and with income spread evenly. Your own figures will differ.

Education, not financial, tax or legal advice. The example uses sample numbers, and your own situation will differ.