How much to set aside for 1099 taxes

Set aside 17% to 25% of net profit for federal tax. irs.gov Where you fall in that range depends on how much you earn — the table below computes it.

The number everyone repeats is 30%. It is too high for most freelancers, and the gap is not small.

Your band

Computed by the same engine the calculator runs, for a single filer in a state with no income tax:

Net profit	Total federal tax	Effective rate	Parked by the 30% rule
$25,000	$4,103	16.4%	$3,397
$40,000	$7,427	18.6%	$4,573
$60,000	$12,037	20.1%	$5,963
$85,000	$17,800	20.9%	$7,700
$120,000	$28,462	23.7%	$7,538
$175,000	$45,460	26.0%	$7,040

Effective rate by income band, and what a flat 30% would park — single filer, TX (no state income tax), tax year 2026. These figures are generated from the same engine the calculator runs, not typed in — every constant is listed with its source.

The last column is the cost of the rule of thumb. It is money you earned, did not owe, and could not use for a year.

Why the rate climbs

Two forces pull in opposite directions.

Self-employment tax is close to flat: 15.3% on 92.35% of net profit, so about 14.1% of profit, until earnings pass the Social Security wage base of $184,500 for 2026. irs.gov That part barely moves.

Federal income tax is progressive and starts at nothing. The standard deduction of $16,100 for a single filer comes off first, and the qualified business income deduction takes up to 20% more. irs.gov At $25,000 of profit those two absorb most of what is left after self-employment tax. At $175,000 they absorb a much smaller share, and the 24% bracket has started to bite.

So the effective rate rises with income and never reaches 30% at the levels most freelancers operate in.

What moves your number

Filing status. Married filing jointly roughly doubles the standard deduction to $32,200, which lowers the effective rate at every income level. irs.gov

A spouse’s W-2 income. It fills the lower brackets before your self-employment income arrives, so your profit is taxed at a higher marginal rate than it would be alone. Joint filing helps the deduction and hurts the bracket.

Your state. The figures above are federal only. A California freelancer adds a state layer on top; a Texas one does not.

W-2 income of your own. If you also have a salary, withholding from it counts toward the safe harbor, and your salary may already have used part of the Social Security wage base — which reduces the self-employment tax on the 1099 side.

A practical way to hold it

Percentages are easy to agree with and hard to follow. What works is mechanical:

Open a second checking account, and move the percentage across the day each invoice clears rather than at the end of the month. Money that never lands in the main account does not get spent. Then pay the quarterly instalment out of that account and let whatever is left ride into the next quarter — by the fourth quarter it usually covers itself.

The failure mode is always the same: setting aside nothing for two months, then trying to find the whole quarterly payment in one go.

Where this stops applying

These are federal estimates for a sole proprietor with no employees. An S-corp election, employees on payroll, inventory, or income in multiple states each change the arithmetic enough that a percentage stops being a useful frame.