How much to set aside for taxes when self-employed (US, 2026)
A plain-English guide for 1099 contractors and sole proprietors: the fixed 15.3% self-employment tax, why income tax varies, and the 2026 quarterly due dates. Each figure comes from the IRS or SSA, with sources listed below.
If you're self-employed in the US (a 1099 contractor, sole proprietor or single-member LLC), no one withholds tax from what clients pay you. Two federal taxes come out of the same profit: self-employment tax (Social Security + Medicare) and income tax. Most states also charge their own income tax. To set money aside, start with the part that's a fixed percentage, then add a buffer for the part that depends on your bracket.
1. Self-employment tax: the fixed part
- The rate is 15.3%: 12.4% Social Security + 2.9% Medicare (IRS Topic 554).
- It applies to 92.35% of your net earnings (profit after business expenses), and only if net earnings are $400 or more.
- The 12.4% Social Security part stops at the 2026 wage base of $184,500 (SSA). Medicare's 2.9% has no cap.
- An Additional Medicare tax of 0.9% applies above $200,000 (single), $250,000 (married filing jointly) or $125,000 (married filing separately).
- You can deduct half of your self-employment tax when you work out your adjusted gross income.
| Net profit | × 92.35% | SE tax (15.3%) | % of profit | Half deductible |
|---|---|---|---|---|
| $30,000 | $27,705 | $4,238.87 | 14.1% | $2,119.43 |
| $60,000 | $55,410 | $8,477.73 | 14.1% | $4,238.87 |
| $100,000 | $92,350 | $14,129.55 | 14.1% | $7,064.78 |
Example: $60,000 profit × 92.35% = $55,410; × 15.3% = $8,477.73. Federal income tax and state tax come on top of this.
2. Income tax: the part that depends on you
Federal income tax depends on your filing status, deductions, credits and other income, so there is no single correct percentage. Start from last year's return and use the worksheet in Form 1040-ES to estimate it. Add your state's income tax if it has one.
A simple approach is to set aside the self-employment tax above plus what you expect to owe in income tax. Our kit's US profiles default to 30% and 35% of each payment; those are planning defaults you can edit, not IRS figures.
3. Pay it quarterly: 2026 due dates
You generally need to make estimated payments if you expect to owe $1,000 or more when you file. For the 2026 tax year the IRS due dates are:
| Income earned | Due |
|---|---|
| Jan 1 – Mar 31, 2026 | April 15, 2026 |
| Apr 1 – May 31, 2026 | June 15, 2026 |
| Jun 1 – Aug 31, 2026 | September 15, 2026 |
| Sep 1 – Dec 31, 2026 | January 15, 2027 |
If a due date falls on a weekend or legal holiday, the next business day counts as on time.
4. Avoiding the underpayment penalty
You generally avoid the penalty if your balance due is less than $1,000 after withholding and credits, or if you paid at least 90% of this year's tax or 100% of last year's tax, whichever is smaller. Higher-income taxpayers have a stricter rule for the prior-year test; see Publication 505.
FAQ
Is self-employment tax the same as income tax?
No. Self-employment tax (15.3% on 92.35% of net earnings) funds Social Security and Medicare. Federal income tax is separate and depends on your bracket, deductions and credits.
Do I pay self-employment tax on all my income?
No, only on 92.35% of your net earnings from self-employment, after business expenses. The 12.4% Social Security part stops at the 2026 wage base of $184,500; the 2.9% Medicare part has no cap.
When are 2026 estimated tax payments due?
April 15, June 15 and September 15, 2026, and January 15, 2027.
Is there one percentage I should save?
No single figure fits everyone. Self-employment tax is a fixed rate; income tax depends on your situation. Estimate with the Form 1040-ES worksheet or ask a tax professional.
Sources
Figures checked against these official pages on 18 October 2026. Rules change; always confirm with the source or a licensed tax professional.
- IRS Topic no. 554, Self-employment tax (page last reviewed 24 Sep 2026)
- SSA, Contribution and Benefit Base (2026: $184,500) (accessed 18 Oct 2026)
- IRS, When are quarterly estimated tax payments due? (page last reviewed 2 Oct 2026)
- IRS, Estimated taxes (page last reviewed 25 Sep 2026)
- IRS, Form 1040-ES (worksheet for estimating tax)
- IRS Publication 505, Tax Withholding and Estimated Tax (accessed 18 Oct 2026)
Want a sheet that applies your own set-aside rate each time an invoice is marked Paid? The Tax Set-Aside Kit is a $29 Google Sheets + Notion template with editable country profiles.
This page is general information, not tax advice.