How much to set aside for taxes on 1099 income (2026)

For a single freelancer with no other income, federal tax in 2026 takes about 19 to 21% of profit between $40,000 and $80,000. Add your state's income tax on top. If you also have a W-2 job, the share is higher, often 25% or more.

The usual advice to "set aside 25 to 30%" is a rough guess. For some people it ties up money they don't owe until April; for others, especially side hustlers, it isn't enough.

Federal tax as a share of profit, 2026

These figures use the 2026 brackets, the standard deduction, self-employment tax and the qualified business income (QBI) deduction, for someone whose only income is their business.

Business profit	Single: federal tax	Single: share	Married jointly: share
$20,000	$3,025	15.1%	14.1%
$40,000	$7,427	18.6%	15.1%
$60,000	$12,037	20.1%	17.3%
$80,000	$16,647	20.8%	18.6%
$100,000	$22,365	22.4%	19.5%
$150,000	$37,608	25.1%	20.7%
$200,000	$53,431	26.7%	22.4%

The married column assumes the spouse has no income. Tax credits, health insurance premiums and retirement contributions would lower these numbers.

Where the money goes

Two taxes make up the total.

Self-employment tax is 15.3% on 92.35% of your profit, which works out to about 14.1% of profit. It covers Social Security and Medicare, and it applies from the first dollar once your net earnings reach $400. See how self-employment tax works.

Income tax is lower than most people expect, because three things come off before the brackets apply: half of your self-employment tax, the standard deduction ($16,100 single, $32,200 married filing jointly in 2026), and the QBI deduction of up to 20% of your business profit. At $60,000 of profit, a single filer's taxable income is only about $31,700.

Why side hustlers need more

If you have a day job, your wages have already used up the standard deduction and the low brackets. Every business dollar lands on top, in a higher bracket.

Take a single filer with $60,000 of W-2 wages and $20,000 of side-business profit. The business adds about $5,450 of federal tax, or 27.2% of its profit, compared with 15.1% for someone whose only income is that $20,000.

A simple system that works

1. Open a separate savings account for taxes.
2. Each time a client pays you, move your percentage into it. Use the table above, plus your state rate.
3. Pay your quarterly estimates from that account.
4. Once a quarter, check the percentage against what you've actually earned, and adjust.

The free calculator gives you a personal percentage in a minute. The Paid & Filed workbook keeps it current from your actual transactions, so the number moves as your year does.