Taxes · 5 min read
How much should I set aside for 1099 taxes?
Nobody takes tax out of 1099 pay, so the amount you keep back is up to you. Here's a rule that works, and when to change it.
Updated September 24, 2026
01
The short rule
Set aside 25–30% of your profit (money in minus business costs), not of the gross amount. Move it to a separate savings account the day you're paid.
02
Where the number comes from
Self-employment tax is about 14% of profit. Federal income tax adds roughly 10–22% for most people after deductions. State tax adds 0–10% depending on where you live.
03
When to go higher
Push towards 30–35% if you live in a high-tax state like California or New York, have a well-paid day job as well, or your profit is climbing fast.
04
When you can go lower
Around 20% can be enough if your profit is modest, you live in a state with no income tax, or you have big deductions like heavy mileage.
05
FAQ
Should I set aside from gross or net?
From profit (net). Setting aside from gross over-saves, which is safe but leaves less to live on.
What do I do with the money?
Pay it as quarterly estimated tax, and keep anything left over for your yearly return.
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