Set aside 20 to 30% of your net profit, the money left after business expenses, every time a client pays you. Where you land inside that range depends on two things: how much profit you will make this year and whether your state has an income tax. The table below gives the 2026 number for each combination. Everything after it shows the math, so you can trust the number instead of guessing.
The next payment that matters: January 15
If you are reading this in the fall, the September payment is behind you and the next one is January 15, 2027: the fourth-quarter estimate for September to December income. It is the payment people most often miss, because it lands after the holidays and before any 1099 arrives. So the practical question is not only how much to save for taxes on 1099 income in general. It is how much to have saved by mid-January.
- Take your year-to-date profit and multiply it by your percentage from the table below.
- Subtract the estimates you already paid in April, June and September.
- What is left is roughly your January 15 payment, plus whatever you still earn in December.
That only works with a current profit figure, and December is also when a few timing choices can lower the number you are saving for. Our year-end tax planning guide for the self-employed covers the nine moves to make before December 31.
The 2026 set-aside table for 1099 income
Percentages are the share of net profit that covers self-employment tax, federal income tax, and state income tax for a single filer taking the standard deduction and the qualified business income deduction, with no other income. Use the "safe set-aside" column: it rounds the exact figures in the three state columns up to the next 5%, so a good year does not turn into an April bill.
| Net profit (2026) | Safe set-aside | No state income tax | 5% state tax | 9% state tax |
|---|---|---|---|---|
| $30,000 | 20 to 30% | 17% | 22% | 26% |
| $50,000 | 20 to 30% | 20% | 24% | 28% |
| $75,000 | 25 to 30% | 21% | 25% | 29% |
| $100,000 | 25 to 35% | 22% | 27% | 31% |
| $150,000 | 25 to 35% | 25% | 30% | 33% |
| $200,000 | 30 to 35% | 27% | 31% | 35% |
Federal figures use the 2026 IRS brackets, the $16,100 single standard deduction, and the $184,500 Social Security wage base. State columns apply a flat rate to adjusted gross income; your state's brackets and deductions will move the number a point or two. Married filers with a spouse's W-2 income and people with other income should start from the "safe" column and adjust with a tax professional.
Two quick reads of the table:
- No state income tax (Texas, Florida, Nevada, Washington, Tennessee, Wyoming, South Dakota, Alaska, New Hampshire): 20% covers profit up to about $50,000, and 25% covers profit up to about $100,000 with a buffer to spare.
- Any state income tax: 25% covers profit up to about $75,000 with a typical 5% state rate. Above that, or in a high-tax state, plan on 30%. Above $150,000, 35%.
The per-payment rule
The table only helps if you apply it before the money looks spendable. Pick your percentage once, then move that share of every client payment into a separate savings account the day it clears. A $5,000 invoice at 25% means $1,250 moves before you touch the rest. If your bank supports rules, set one that transfers a fixed percentage of every deposit over a threshold; if not, do it by hand the same day.
Because the percentage applies to profit, not revenue, you have a choice. Either apply the table percentage to your net profit each month, or apply a slightly lower rate to gross revenue. For the designer in the worked example below, 25% of profit and 20% of gross revenue land in the same place. Applying the profit percentage to gross revenue instead is the simplest way to build in a buffer.
Where the number comes from
Your tax as a 1099 worker comes from three sources. Once you see each one, the total stops feeling arbitrary.
Self-employment tax: 15.3%
This is the one that surprises new freelancers. An employee and their employer split Social Security and Medicare, 7.65% each. A 1099 worker pays both halves, 15.3%, on top of income tax.
- Social Security: 12.4% on the first $184,500 of net earnings (the 2026 wage base)
- Medicare: 2.9% on all net earnings, no cap
- Additional Medicare: 0.9% on net earnings above $200,000 for single filers
The 15.3% applies to 92.35% of your net profit, and you deduct the employer-equivalent half when you calculate income tax. In practice self-employment tax works out to roughly 14% of profit.
Federal income tax: 10 to 24% for most freelancers
Income tax uses the same brackets as everyone else. For 2026, a single filer pays 10% on taxable income up to $12,400, 12% from there to $50,400, 22% up to $105,700, and 24% up to $201,775. The 2026 standard deduction is $16,100 for a single filer and $32,200 for a married couple filing jointly.
Two things pull the real rate well below the bracket number. The first dollars are taxed at 10% and 12%, so a freelancer with $65,000 of profit never reaches the 22% bracket at all. And the qualified business income deduction removes up to 20% of your profit from taxable income, which is why the table's federal share is smaller than most people expect.
State income tax: 0 to 13%
Nine states have no income tax on wages or self-employment income. California tops out above 12%, New York and New Jersey near 10%, and most states fall in a 3 to 7% range. This is the single biggest reason two freelancers with the same profit should set aside different percentages.
A worked example: $80,000 of 1099 income
A graphic designer bills $80,000 in 2026, lives in a state with a 5% income tax, files as single, and tracks $15,000 of business expenses through the year.
Step 1: Net profit
- Gross 1099 income: $80,000
- Business expenses: -$15,000
- Net profit: $65,000
Step 2: Self-employment tax
- $65,000 x 92.35% = $60,028 taxable base
- $60,028 x 15.3% = $9,184
Step 3: Federal income tax
- Adjusted gross income: $65,000 - $4,592 (half of the self-employment tax) = $60,408
- Standard deduction (2026, single): -$16,100 = $44,308
- Qualified business income deduction (20%, capped at 20% of taxable income here): -$8,862
- Taxable income: $35,446
- Federal tax: 10% of $12,400 plus 12% of the remaining $23,046 = $4,006
Step 4: State income tax
- 5% of roughly $60,408 = about $3,020 (states differ in what they deduct)
Step 5: Total
- Self-employment tax: $9,184
- Federal income tax: $4,006
- State income tax: $3,020
- Total: $16,210
- As a share of net profit: 24.9%
- As a share of gross income: 20.3%
If she moves 25% of her profit into a tax account, she covers the bill with almost no room to spare. If she moves 25% of every gross payment instead, $20,000 over the year, she has a $3,800 cushion. Both are the same rule; the second is easier to apply the day a payment lands.
The percentage only works if the profit figure it applies to is current. Share a photo or PDF of each receipt in the ClaryBook app and it is recorded on the right Schedule C line, so your year-to-date profit is always current. ClaryBook also shows a federal quarterly estimate and, once you enter last year's total tax, the safe-harbor number. It does not file or pay for you, and it does not estimate state tax.
See ClaryBook for sole proprietorsHow deductions change the number
Every dollar of business expense you record comes off the profit the table applies to. In the example above, the $15,000 of expenses saved about $4,000 in tax. The common ones for a 1099 worker:
- Home office (simplified method: $5 per square foot, up to $1,500)
- Health insurance premiums
- Software and tools you use for work
- Business mileage (72.5 cents per mile for January to June 2026, 76 cents for July to December 2026)
- Professional development and courses
- Internet and phone, business-use share
- Marketing and advertising
- Accountant and legal fees
- Equipment such as computers and monitors
- Retirement contributions (SEP-IRA, Solo 401k)
Most freelancers lose money here through friction, not ignorance. The $12 parking fee, the $89 software renewal, the 340 miles driven in March. Each is small; together they are thousands in missed deductions. Our guides to freelancer deductions and claiming expenses without receipts cover what qualifies and how to prove it.
When quarterly estimated taxes are due, and how much to pay
If you expect to owe $1,000 or more for the year, the IRS expects quarterly payments on Form 1040-ES.
- Q1: April 15 (January to March income)
- Q2: June 15 (April to May income)
- Q3: September 15 (June to August income)
- Q4: January 15 of the following year (September to December income)
Q2 is only two months after Q1. Put it on the calendar.
Two safe ways to size each payment:
- Safe harbor: pay 100% of last year's total tax, split in four (110% if your adjusted gross income was over $150,000). Pay it on time and you generally avoid the underpayment penalty, whatever you end up owing.
- Current-year estimate: estimate this year's total from the table, split in four. More accurate when income is growing, but it requires current books.
If your income swings month to month, the annualized income installment method on Form 2210 lets you pay on what you actually earned each period instead of a flat quarter. The underpayment penalty itself is interest, currently around 7% a year on the shortfall, so a quarter paid a few months late costs far less than the payment itself. Late is still far better than never. Our quarterly tax estimates guide walks through the form.
If you have not been setting anything aside
- Estimate what you owe so far. Year-to-date income minus expenses, times your table percentage.
- Start the per-payment rule today. You cannot fix the past, but every payment from here on is covered.
- Make a catch-up estimated payment now. It shrinks the penalty from the day it lands.
- If April still comes up short, the IRS offers installment agreements. The interest is manageable; ignoring the bill is not.
Cheat sheet
- Rule: move 20 to 30% of net profit (or 20 to 25% of gross revenue) into a tax account the day each payment clears
- No state income tax: 20 to 25%. State income tax: 25 to 30%. Profit above $150,000: 30 to 35%
- Self-employment tax: 15.3% on 92.35% of profit; Social Security part stops at $184,500 in 2026
- 2026 federal brackets (single): 10% to $12,400, 12% to $50,400, 22% to $105,700, 24% to $201,775; standard deduction $16,100
- Quarterly payments: April 15, June 15, September 15, January 15
- Safe harbor: 100% of last year's tax (110% above $150,000 AGI) avoids the penalty
- Keep the books current: the percentage is only as good as the profit figure it applies to
FAQ
How much should I save for taxes on 1099 income before the January 15 payment?
Multiply your year-to-date net profit by your set-aside percentage, usually 20 to 30%, then subtract the estimated payments you already made in April, June and September. The remainder is roughly what the January 15 fourth-quarter payment needs to cover, plus tax on any December income.
The stress of 1099 taxes is uncertainty: not knowing what you owe, whether you saved enough, whether a surprise is coming. A percentage from the table, a separate account, and books that stay current remove it. You know your number, and when the quarterly date comes, the money is already there.