Updated June 16, 2026 · 5 min read
A good rule of thumb: set aside 25–35% of your net profit for federal taxes as a 1099 contractor — closer to 25% at lower incomes, 30–35% as you climb brackets or live in a high-tax state. That covers both your self-employment tax (15.3%) and federal income tax. Because nothing is withheld from 1099 pay, the IRS expects you to send it in four times a year as estimated taxes. Here's how to size your set-aside and when to pay it.
You owe two taxes on 1099 income: self-employment tax (a flat 15.3% on 92.35% of profit ≈ 14.1%) and federal income tax (which starts near 0% after deductions and rises with your bracket). Add them and most solo earners land between 25% and 35% of profit. Setting aside a fixed slice of every payment as it comes in keeps you from spending money that was never really yours.
| Net profit | Set-aside guide |
|---|---|
| Under $40,000 | ~25% |
| $40,000–$90,000 | ~28–30% |
| $90,000–$160,000 | ~30–33% |
| $160,000+ | ~33–35%+ |
Rules of thumb are for planning; for the real figure, run your expected profit through a calculator. It computes your self-employment tax and income tax precisely and divides the total into four equal quarterly payments.
| Quarter | Income period | Payment due |
|---|---|---|
| Q1 | Jan 1 – Mar 31, 2026 | April 15, 2026 |
| Q2 | Apr 1 – May 31, 2026 | June 15, 2026 |
| Q3 | Jun 1 – Aug 31, 2026 | September 15, 2026 |
| Q4 | Sep 1 – Dec 31, 2026 | January 15, 2027 |
Pay online through IRS Direct Pay or EFTPS. If a due date falls on a weekend or holiday, it moves to the next business day. You generally must pay estimated taxes if you expect to owe $1,000 or more for the year.
A safe rule of thumb is 25–35% of your net profit for federal taxes — about 25% at lower incomes and 30–35% as you move into higher brackets. This covers both self-employment tax (15.3%) and federal income tax. Add more if your state has income tax.
For 2026 income: April 15, 2026 (Q1), June 15, 2026 (Q2), September 15, 2026 (Q3), and January 15, 2027 (Q4). If a date falls on a weekend or holiday it shifts to the next business day.
Generally yes, if you expect to owe $1,000 or more for the year. Paying quarterly avoids an IRS underpayment penalty. Meet the safe harbor by paying at least 90% of this year's tax or 100% of last year's (110% if prior-year income topped $150,000).
You'll owe the balance at filing, plus a possible underpayment penalty for not paying enough during the year. Setting aside ~30% of each payment and paying quarterly keeps you ahead of both.
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