How much to set aside for taxes on 1099 income
No employer withholds for freelancers. Here's how to think about setting money aside as you earn — with a rough estimator.
When you earn 1099 income, no employer withholds taxes for you. You are responsible for income tax and self-employment tax (which covers Social Security and Medicare). Setting money aside as you earn keeps the bill from being a surprise.
Why self-employment tax catches people out
Self-employment tax applies on top of regular income tax, so the combined rate on freelance profit is higher than many first-time filers expect. The exact share depends on your total income, deductions and bracket, so treat any rule-of-thumb percentage as a starting point, not a precise figure.
A simple approach
- Move a fixed percentage of each payment into a separate savings account the day it lands.
- Track deductible business expenses — they lower the profit you are taxed on.
- Revisit the percentage after a few months once you can see real income and expenses.
If you expect to owe a meaningful amount, you may also need to make quarterly estimated payments rather than waiting until April. The exact threshold and amounts are individual — a tax professional or the IRS estimated-tax guidance can confirm your situation.
Sources
- IRS — Self-Employed Individuals Tax Center
- IRS — Estimated Taxes (Form 1040-ES)
Rough set-aside estimator
Enter your expected net profit (income minus business expenses) for the year. This runs entirely in your browser — nothing you type is sent or stored.
Illustrative only — not tax advice, and not a calculation of tax owed. Confirm your situation with a qualified CPA/EA or the IRS.
See where you stand
The free readiness check scores your records and flags the gaps that matter — in 2–4 minutes, with no SSN, tax forms or bank data.
Check your tax-readinessEducational information only — not tax, legal or financial advice, and not specific to your situation. Consult a qualified CPA/EA before acting.