← Guides · November 8, 2026
How Much Should a 1099 Freelancer Set Aside for Taxes in 2026?
The most common money mistake new freelancers make is spending the whole invoice. Unlike a paycheck, a 1099 payment arrives with no tax taken out, and part of it already belongs to the IRS.
The short answer
Set aside 25–35% of your net profit (income minus business expenses). Lower incomes and states without income tax land near the bottom of that range; high incomes in high-tax states land at the top or above.
Where the money goes
Every freelance dollar of profit can be hit by three taxes:
- Self-employment tax: 15.3% on 92.35% of profit (12.4% Social Security + 2.9% Medicare). Social Security stops at the 2026 wage base of $184,500.
- Federal income tax: 10% to 37% by bracket, after the standard deduction and, for many freelancers, the 20% QBI deduction.
- State income tax: from 0% (Texas, Florida, Washington, Nevada…) to over 10%.
Three examples (single filer, 2026)
| Net profit | State rate | Total tax | Set aside |
|---|---|---|---|
| $40,000 | 0% | ≈ $7,400 | ≈ 19% |
| $85,000 | 5% | ≈ $21,750 | ≈ 26% |
| $150,000 | 6% | ≈ $46,000 | ≈ 31% |
Estimates with the standard deduction and the QBI deduction; your numbers will differ. Run yours in the calculator.
A simple system that works
- Open a separate savings account just for taxes.
- Every time a client pays, move your set-aside percentage there the same day.
- Pay the IRS from that account each quarter (April 15, June 15, September 15, January 15).
- At year end, whatever is left over is a bonus, not a debt.
Lower the bill legally
Track every business expense (software, equipment, a dedicated home office, health insurance premiums, retirement contributions such as a SEP-IRA or Solo 401(k)). Each deductible dollar reduces both self-employment tax and income tax, which is why a $1,000 expense can save $300 or more.