The short answer

Most U.S. 1099 freelancers should set aside somewhere between 20% and 35% of every payment they receive, before spending any of it. The exact number depends on your total income (tax brackets are progressive — higher income means a higher percentage), your filing status, your deductible expenses, and whether you have other income (like a W-2 job) pushing you into a higher bracket.

A flat "25% for everyone" rule is a reasonable starting point for a moderate-income single filer with typical expenses — but it can be too low for high earners and too high for freelancers with large deductible expenses or very modest income.

Why it's not one universal number

Your total 2026 federal tax bill as a freelancer has two very different pieces:

  • Self-employment tax (15.3%) — a flat rate on 92.35% of your net profit (Social Security capped at the $184,500 wage base, Medicare uncapped). This piece doesn't change much with income level, at least until you're well above the wage base.
  • Federal income tax (10%–37%, progressive) — this piece grows as your income grows, because the U.S. system uses tax brackets. A freelancer netting $30,000 has a much lower marginal rate than one netting $300,000.
  • The 2026 standard deduction ($16,100 single / $32,200 married) and the 20% QBI deduction both shrink your taxable income before any bracket applies — which is why low-to-moderate earners often owe much less income tax than they expect.

Add those two pieces together, divide by your gross income, and you get your true effective rate — which is usually lower than your top marginal bracket, because only the income inside each bracket is taxed at that bracket's rate.

Quick set-aside calculator

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Estimated Effective Rate
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Recommended Set-Aside

Assumes single filer, no other income, QBI deduction applied, federal tax only. For a full breakdown with quarterly amounts, use the full calculator.

A simple system that works

  1. Open a separate savings account for taxes only — never mix it with your spending account.
  2. The moment you get paid, transfer your set-aside percentage to that account before you touch the rest.
  3. Recalculate quarterly, not just once a year — if your income is trending higher or lower than expected, adjust your percentage so you're not caught short (or over-saving) in Q4.
  4. Pay on the actual due dates — see the full 2026 due date list.

When to set aside more than 25%

  • You also have a W-2 job pushing your total income into a higher bracket.
  • You have very few deductible business expenses relative to income.
  • You're netting well above $150,000–200,000, where marginal rates climb faster.
  • You live in a state with its own income tax — this tool is federal-only, so add your state's rate on top.

Get the full breakdown, not just a percentage

See your exact SE tax, federal income tax, and per-quarter payment with 2026 due dates.

Open the full calculator → Read the Medium deep-dive →

Sources

  • IRS Rev. Proc. 2025-32 — 2026 federal income tax brackets & standard deduction
  • IRS — Self-Employment Tax (Topic 554); Section 199A / Form 8995 (QBI deduction)
  • SSA.gov — 2026 Contribution and Benefit Base