Every article on this topic says "set aside 25–30%." That advice is wrong for a part-time freelancer earning $20,000 (who needs 15%), wrong for a $200,000 consultant in California (who needs 36%), and wrong for anyone with a day job. This guide replaces the rule of thumb with actual 2026 numbers — by income, by state, by filing status — and turns them into the weekly and monthly amounts to move into savings.
Short answer (single filer, 2026): set aside 15–18% of net profit under $30,000, 20–23% from $30,000 to $75,000, 25–29% from $75,000 to $150,000, and 30–32% above $150,000 — for federal taxes. Then add your state: 0% in Texas, Florida and seven others, 3–5% in most states, 5–7% in California, New York, Oregon and Minnesota at higher incomes. If you also have a W-2 job, add roughly 10 points.
Your 1099 tax bill has a flat part and a progressive part. Self-employment tax is a flat 14.1% of net profit (15.3% on 92.35% of profit) from the first dollar over $400. Federal income tax starts at zero — the standard deduction and the deduction for half of your SE tax mean a single filer owes no income tax until profit passes about $17,500 — and climbs through 10%, 12%, 22% and 24% brackets. Stack them and the effective rate is a curve, not a constant:
| Net profit | Total federal tax | Set aside (federal) | Per month | Per week |
|---|---|---|---|---|
| $10,000 | $1,413 | 14.1% | $118 | $27 |
| $20,000 | $3,075 | 15.4% | $256 | $59 |
| $30,000 | $5,417 | 18.1% | $451 | $104 |
| $40,000 | $7,933 | 19.8% | $661 | $153 |
| $50,000 | $10,461 | 20.9% | $872 | $201 |
| $60,000 | $12,989 | 21.6% | $1,082 | $250 |
| $75,000 | $17,101 | 22.8% | $1,425 | $329 |
| $100,000 | $25,745 | 25.7% | $2,145 | $495 |
| $125,000 | $34,389 | 27.5% | $2,866 | $661 |
| $150,000 | $43,385 | 28.9% | $3,615 | $834 |
| $200,000 | $61,580 | 30.8% | $5,132 | $1,184 |
| $300,000 | $94,209 | 31.4% | $7,851 | $1,812 |
Single filer, standard deduction, no state tax, no QBI or retirement deductions. Figures from the 2026 engine behind our calculator; full breakdown of SE vs. income tax in the 1099 tax rate guide.
A $20,000 side-hustler who dutifully saves 30% locks up $6,000 for a $3,075 bill — money that could have been working elsewhere all year. A $200,000 earner who saves 30% in a no-tax state is fine; the same person in California is $12,000 short. Use your row, not the folklore.
State income tax is the second-biggest variable, and the ranking changes with income. Single filer, combined federal + state set-aside percentage:
| Net profit | Texas / Florida | North Carolina | Pennsylvania | California | New York | Illinois |
|---|---|---|---|---|---|---|
| $30,000 | 18.1% | 20.1% | 21.1% | 18.7% | 21.1% | 22.2% |
| $50,000 | 20.9% | 23.6% | 24.0% | 22.6% | 24.7% | 25.2% |
| $75,000 | 22.8% | 25.8% | 25.9% | 26.0% | 27.0% | 27.2% |
| $100,000 | 25.7% | 28.9% | 28.8% | 30.2% | 30.2% | 30.2% |
| $150,000 | 28.9% | 32.3% | 32.0% | 34.7% | 33.7% | 33.4% |
Two patterns worth knowing. Flat-tax states hit low earners hardest — Illinois (4.95%) and Pennsylvania (3.07%, with no standard deduction at all) cost a $30,000 freelancer more than California does. Progressive states hit high earners hardest — California passes everyone by $100,000 and is the most expensive of the six at $150,000. Nine states have no income tax on this income at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Every state's exact figure is on its own page (California, New York, Illinois, Pennsylvania, and the rest in the footer), and the 50-state ranking compares them side by side.
Some cities and counties add their own income tax that the state figures above don't include: New York City (about 3–3.9%), Philadelphia, Ohio and Kentucky municipalities, Maryland counties (2.25–3.2%), Indiana counties, and Michigan cities. If you live in one, add it.
A married couple with one 1099 income and no other earnings pays substantially less because the standard deduction doubles to $32,200 and every bracket is twice as wide: 17.0% at $50,000, 19.5% at $75,000, 20.9% at $100,000, 22.8% at $150,000, 25.7% at $200,000 (federal only). If your spouse also earns, though, their income fills the low brackets first and your 1099 profit lands higher up the curve — a two-income couple should treat the freelance income like side income (next section) and run the household total in the calculator.
This is where the standard advice fails worst. If you earn $60,000 in wages and $15,000 from freelancing, your freelance profit is not taxed at the 18–20% a full-time $15,000 freelancer would pay. It sits on top of your salary, so every dollar is taxed at your top marginal bracket from the first dollar:
Combined: 36–42% of side-income profit in the 22% bracket, or 28–33% in the 12% bracket, minus a small offset from deducting half the SE tax. On $15,000 of side profit at a $70,000 salary that is roughly $5,500–$6,000, not the $2,700 the "18%" figure would suggest.
If you have a W-2 job you can skip estimated payments entirely: divide the annual side-income tax by your remaining paychecks and put that figure in Step 4(c), "Extra withholding," on a new Form W-4. Withholding counts as paid evenly through the year, so it also eliminates underpayment penalties. The gig worker calculator shows the tax caused by side income on its own when you enter your W-2 wages.
Every figure above is a percentage of net profit, because that's what the IRS taxes. But the practical habit most freelancers want is "move X% of every payment into savings the day it lands" — and payments are gross. Convert with your profit margin:
Set-aside % of gross = set-aside % of profit × (profit ÷ gross)
If you don't know your margin yet, use the profit percentage on gross for the first quarter, then true it up once you've seen a few months of real expenses. Over-saving early is cheap; under-saving is a penalty.
You don't have to get the estimate exactly right. The IRS underpayment penalty is waived if, through withholding and equal quarterly payments, you pay at least:
Whichever is smaller. In a year when your income jumps, paying last year's tax ÷ 4 each quarter is fully penalty-proof even if you end up owing far more in April — as long as you've saved the difference. In a year when income drops, aim for 90% of the new projection. The quarterly tax calculator works both numbers out; if this is your first 1099 year and you had no tax last year, the prior-year safe harbor is $0 and you simply pay the projection.
Income changes; the percentage should too. Re-run your numbers at each quarterly deadline with actual year-to-date profit and a realistic guess for the rest of the year. If you've over-saved, lower the next payment. If a big contract landed, raise it — the IRS's annualised-income method (Form 2210, Schedule AI) lets you pay in proportion to when the income arrived, so a slow first half and a strong second half doesn't have to mean a Q1 penalty.
Three things that should trigger an immediate recalculation: crossing $105,700 of taxable income (the 22% → 24% boundary), crossing $184,500 of net earnings (Social Security stops, your effective rate falls), and any change in filing status.
Income, expenses, state, filing status — the calculator gives you the annual bill, the four quarterly payments and the effective rate to set aside.
Open the 1099 Tax Calculator →How much should I set aside for taxes as a 1099 contractor?
For 2026, set aside 20–23% of net profit if you earn under $60,000, 25–28% between $60,000 and $125,000, and 30–35% above that — then add your state's rate (0% in nine states, 3–7% in most others). A single filer in Texas with $75,000 of profit needs 22.8%; the same person in Illinois needs 27.2%.
Is 30% enough to set aside for 1099 taxes?
For most single filers under $125,000 of net profit, yes — 30% covers federal and state tax in every state with room to spare. It is too little above $150,000 in a high-tax state (California at $150,000 needs 34.7%) and far too much for part-timers under $30,000, who typically owe 15–18%.
Should I set aside a percentage of gross income or net profit?
Tax is calculated on net profit, so the percentages apply to profit. If you set aside a percentage of every gross payment, use a lower figure — roughly your net-profit percentage multiplied by your profit margin. A gig driver whose mileage deduction leaves 60% of gross as profit needs only about 10–13% of gross.
How much should I set aside if I have a W-2 job and 1099 side income?
More than a full-time freelancer at the same profit. Side income is taxed at your top marginal bracket from the first dollar: 14.1% self-employment tax plus your marginal federal rate (usually 22% or 24%) plus state. Budget 30–42% of net side-income profit depending on your salary bracket, or add that amount as extra withholding on your W-4 instead of paying quarterly.
Where should I keep the money I set aside for taxes?
In a separate high-yield savings account that you never spend from, transferring the percentage the day each client payment arrives. Pay the IRS from that account on the four quarterly due dates (April 15, June 15, September 15 and January 15) via IRS Direct Pay, which is free.
Sources: IRS Rev. Proc. 2025-32 (2026 brackets and standard deductions); IRS Publication 505 (estimated tax, safe-harbor rules); IRS Form 1040-ES instructions; SSA 2026 wage base; Tax Foundation 2026 state rates. Estimates for planning only — not tax advice.