1099 Taxes: How Much Should You Actually Set Aside in 2026?
The commonly-cited 25-30% rule already assumes a state tax rate. Here's what's actually federal, by income level, computed from real 2026 formulas.
The Quick Answer
For federal taxes alone (self-employment tax + federal income tax, single filer, standard deduction, no state tax), set aside roughly 20% at $40,000 net profit, 24% at $80,000, and 29% at $150,000 -- the percentage rises with income because federal brackets are progressive even though the 15.3% self-employment tax rate itself doesn't change. Add your state's income tax rate on top for your real total. Most independent advisors cite a rounder 25-30% all-in rule of thumb precisely because it already includes a typical state tax, and recommend 35-40% for high earners or high-tax states.
- The percentage isn't flat -- it rises with income, because self-employment tax is a flat 15.3% but federal income tax is progressive and stacks on top of it.
- Every "set aside X%" figure you'll see online already includes an assumed state tax rate, unless it explicitly says "federal only." Compare like with like.
- Setting aside a round number from a blog post is a starting point, not a substitute for running your actual numbers -- deductions swing this more than almost anything else.
- The set-aside percentage answers "how much cash to hold back." The safe-harbor rule (covered in our self-employment tax guide) answers a different question: how much of that you're legally required to have paid in by each quarterly deadline to avoid a penalty.
"Set aside 25-30%" is the single most common piece of self-employment tax advice on the internet, and it's a reasonable starting point -- but it's a blended, all-in number that already assumes a typical state tax rate baked in. If you want to know what's genuinely federal (the part that's the same no matter which state you live in), the real answer is lower at moderate incomes and climbs as profit grows.
What the Math Actually Says, by Income Level
These figures come from running this site's own self-employment tax and federal income tax formulas -- the same math behind the Self-Employment Tax Calculator -- for a single filer taking the standard deduction, with no other income, credits, or business deductions beyond the standard SE tax deduction itself.
| Net profit | SE tax (15.3%) | Federal income tax | Total (federal only) | % of net profit |
|---|---|---|---|---|
| $40,000 | $5,651.82 | $2,280.89 | $7,932.71 | 19.8% |
| $80,000 | $11,303.64 | $7,526.60 | $18,830.24 | 23.5% |
| $150,000 | $21,194.32 | $22,190.68 | $43,385.01 | 28.9% |
Why the percentage climbs with income: self-employment tax is a flat 15.3% of 92.35% of profit at every income level (until the Social Security portion caps out at $184,500 in 2026 net earnings) -- it doesn't get more expensive as a percentage. Federal income tax does, because it's progressive: the $150,000 earner has much more of their income taxed at the 22% and 24% brackets than the $40,000 earner, who has most of their taxable income sitting in the 10% and 12% brackets.
Add your state's income tax rate to every figure above for your real total. A freelancer in Texas or Florida (no state income tax) stops here. A freelancer in California, adding roughly 6-9% at these income levels, lands close to the commonly-cited 25-30% "all-in" range -- which is exactly why that rule of thumb exists and works reasonably well as a default.
Enter your actual revenue, expenses, and filing status for a number specific to you, not a rule of thumb.
Calculate my exact numberWhy Your Real Number Will Differ
Three things move your real percentage away from the table above, in either direction:
- Business deductions. The table assumes no deductions beyond the standard SE tax adjustment. Every dollar of legitimate business expense -- home office, mileage, equipment, software, a SEP-IRA or Solo 401(k) contribution -- lowers net profit, which lowers both the SE tax base and the income tax base simultaneously. This is the single biggest lever most freelancers have.
- State tax. Nine states have no wage income tax at all; several others run 9-13%+ at the top. This is the main reason the commonly-cited "25-30%" range exists as a blended national average -- it has to split the difference across states this different.
- Filing status and other income. Married filing jointly with a spouse's W-2 income changes which bracket your self-employment profit lands in entirely -- sometimes pushing it higher (stacked on top of a spouse's salary), sometimes lower (if MFJ brackets and the standard deduction shelter more of it than filing single would).
The practical takeaway: a round percentage from a blog post (including this one) is a reasonable holding pattern for your first year or two of self-employment, but it's not a substitute for running your actual numbers once you have a real income and expense picture -- especially once profit clears roughly $60,000-$80,000, where S-Corp election can start meaningfully changing the math.
Frequently asked questions
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Founder and developer of We Are Calculator. No lead selling, no lender rankings, no affiliate-pulled recommendations. Every guide pairs primary sources (IRS, CFPB, Federal Reserve, CRA) with the free calculators you can run yourself.
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