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How much should you set aside for taxes on 1099 income?

Updated October 25, 2026

When you are paid on a 1099, nobody takes tax out of the payment. The full amount lands in your account, and the tax bill comes later. Here is what goes into that bill, and a simple way to plan for it.

The short answer

  • A simple starting range is to set aside 25% to 30% of your 1099 profit. It is a rough planning number, not a rule. Your own number depends on your income, filing status and state.
  • The bill has two main parts: self-employment tax (Social Security and Medicare) and income tax. Some states add state tax.
  • If you also have a W-2 job, you may be able to raise the tax taken out of your W-2 paychecks instead of making quarterly payments.
  • Have a CPA check your plan before you rely on it.

First, what counts as profit

Profit is what you were paid minus the ordinary and necessary costs of doing the work. The IRS calls this net earnings. Tax is figured on profit, not on the full payment. Ask your CPA which of your costs count.

Part 1: self-employment tax

This is Social Security (12.4%) plus Medicare (2.9%), which adds up to 15.3%. It is charged on 92.35% of your profit. In plain terms, that works out to about 14.1% of your profit until your earnings reach the yearly Social Security limit.

Example (made-up numbers): You make $10,000 of profit on side shifts. 92.35% of that is $9,235. Self-employment tax is 15.3% of $9,235, which is about $1,413.

That is only the self-employment tax. Income tax comes on top. You can usually deduct half of the self-employment tax (about $706 here) when you figure your income tax.

If your net earnings are under $400 for the year, self-employment tax generally does not apply. See how the Social Security limit works for what changes at higher earnings.

Part 2: income tax

Income tax depends on your total income, your filing status and your deductions. This is why the 25% to 30% range is wide, and why we do not give one number. Some states also have an income tax and some do not. A CPA can turn the range into a number that fits you.

A simple way to plan

  1. Open a separate savings account just for taxes.
  2. Each time you are paid, move a fixed percentage into it. Start in the 25% to 30% range, or use the number your CPA gives you.
  3. Keep a simple record of each payment and each work cost.
  4. When a tax payment or your return is due, the money is already set aside. Money you do not end up needing stays yours.

Estimated tax payments

The IRS says you generally need to make estimated payments during the year if both of these are true:

The last-year part of that rule only applies if last year's tax return covered all 12 months.

The four payment dates are usually April 15, June 15, September 15, and January 15 of the next year. If a date falls on a weekend or legal holiday, the next business day counts. Dates and rules can change, so check the IRS page below or ask your CPA.

If you also have a W-2 job

The IRS says you can increase your withholding to cover the estimated tax requirement. Ask your payroll department how to add extra withholding. On the federal Form W-4, this is the extra withholding line. Withholding is generally treated as paid evenly through the year, so this can be simpler than four separate payments. Ask your CPA whether it fits your situation.

See the tax in your own comparison

The free calculator includes self-employment tax in the value of the 1099 job and shows results before income tax. No sign-up. What you type stays in your browser.

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Sources

Scrubs & Fine Print gives educational information only, not personal tax, legal or financial advice. Rules, limits and dates change, and your situation may differ. Examples use made-up numbers. Check with a CPA or a lawyer before you decide. Figures are for tax year 2026.