How much should I set aside for 1099 taxes?
Estimate a 1099 tax reserve from business revenue, expenses, W-2 income, and withholding instead of relying on one generic percentage.
There is no universal 1099 percentage. Start with net business profit, estimate self-employment tax and federal income tax, subtract expected withholding, and reserve the remaining amount. State and local tax may require an additional estimate.
2026 1099 Tax Calculator — Per-Payment Reserve & Quarterly Tax
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Simplified 2026 federal estimate. State tax and many credits, phaseouts and deductions are not included.
Why this answer depends on your details
A 1099 payment is usually gross business revenue, not taxable profit. Expenses, W-2 withholding, filing status, and other income can move the reserve materially.
How to work through it
- Enter annual 1099 or business revenue.
- Subtract ordinary and necessary business expenses to estimate net profit.
- Estimate self-employment tax and federal income tax separately.
- Subtract federal withholding or payments already made.
- Use the remaining annual amount as a planning reserve, then review the quarterly safe-harbor rules.
Common mistakes
- Applying 30% to gross receipts without checking expenses.
- Counting self-employment tax as the entire tax bill.
- Ignoring federal withholding from a W-2 job.
- Treating a cash reserve as the exact amount due on every IRS deadline.
Frequently asked questions
Is 30% always enough for 1099 taxes?
No. A percentage is only a cash habit. Your actual estimate depends on net profit, filing status, other income, deductions, credits, withholding, and state rules.
Should I reserve from gross income or profit?
Use profit after defensible business expenses as the starting federal planning base. Keep a separate cash buffer for expenses that have not yet been classified.