How this calculator works
It runs the same 2026 tax chain as our1099 vs W-2 calculator and ourrate calculator: the same code, so the three tools cannot disagree about the tax on a given profit. Nothing is hidden; this is exactly what the engine does:
- Revenue minus expenses gives profit. Your deductible business costs come off first. What's left is Schedule C net profit, and that (not your revenue) is what tax is actually calculated on.
- Self-employment tax comes off the profit. 15.3% on 92.35% of it: 12.4% Social Security up to the $184,500 wage base for 2026, 2.9% Medicare with no cap, plus 0.9% Additional Medicare above your filing status's threshold.
- Half of that SE tax is deductible against income tax (§164(f)). Profit minus that half-deduction is the income figure the rest of the chain works from.
- Federal income tax is a bracket walk on what's left after your standard deduction and the §199A qualified business income deduction: 20% of qualified business income, capped by the §199A(a) overall limit at 20% of taxable income before the deduction. For almost every pure-1099 filer that cap is the one that binds.
- State income tax is your state's flat effective rate applied to profit minus the deductible half of your SE tax: not to your full profit, and not to income after the standard deduction. Getting that base right matters: in the worked example below it is 2.29% of $104,087.45, not of $112,000.
- Add the three tax lines together and divide by revenue.That ratio is the honest answer. We then round it up to a whole percentage point and recompute the dollar reserve from the rounded figure, so what you bank is always at or above what you owe.
The insight worth sitting with: as a 1099 you pay both halves of FICA and nothing is withheld for you, so the slice you owe is bigger than a payroll stub ever made it look, and it climbs as you earn more, which is why we round up rather than down.
One consequence of the tax chain surprises people, and it is not a bug: the "next $1,000 of profit" figure falls once your profit passes roughly $199,800. That is the 12.4% Social Security portion switching off at the $184,500 wage base (which applies to 92.35% of your profit). Past that point extra work is genuinely taxed more lightly.
A worked example, every step shown
Single filer in Georgia (2.29% effective state rate), consulting flavour, expecting $120,000 of invoiced revenue against $8,000 of business expenses. To reproduce it above, set the state to Georgia and leave the consulting defaults alone.
- Profit: $120,000 − $8,000 =$112,000.00.
- Self-employment tax. SE base = 92.35% × $112,000 = $103,432.00. Social Security = 12.4% × $103,432.00 =$12,825.57 (under the $184,500 wage base, so none is capped away). Medicare = 2.9% × $103,432.00 =$2,999.53. The SE base is below the $200,000 Additional Medicare threshold for a single filer, so that line is$0. SE tax total = $15,825.10.
- Half-SE deduction: $15,825.10 ÷ 2 =$7,912.55. Income base = $112,000 − $7,912.55 =$104,087.45.
- Federal income tax. Taxable before QBI = $104,087.45 − $16,100 standard deduction = $87,987.45. The QBI deduction is the lesser of 20% × $104,087.45 = $20,817.49 and 20% × $87,987.45 = $17,597.49, so $17,597.49; the taxable-income cap binds, as it does for almost every pure-1099 filer. Taxable income = $87,987.45 − $17,597.49 = $70,389.96. Tax = 10% × $12,400 + 12% × $38,000 + 22% × $19,989.96 = $1,240.00 + $4,560.00 + $4,397.79 = $10,197.79.
- Georgia state tax: 2.29% × $104,087.45= $2,383.60. Note the base: profitminus the half-SE deduction, not the $112,000 profit itself. On $112,000 it would have been $2,564.80, and the reserve would have been overstated by $181.
- Total to set aside: $15,825.10 + $10,197.79 + $2,383.60 = $28,406.49.
- As a percentage: $28,406.49 ÷ $120,000 =23.67% of everything invoiced (or 25.36% of profit: the same bill, different denominator). Rounded up to a whole point:24%.
- The reserve: 24% × $120,000 =$28,800.00, which clears the $28,406.49 bill by$393.51: a third of one percent of revenue, parked rather than lost. Split four ways that is$7,200.00 per quarter.
Every number above was computed by the engine, checked by hand against IRS mechanics, and reconciled a third time independently; the test suite asserts each line so a future change cannot quietly move one.
Frequently asked questions
How much should I set aside for taxes as a 1099 contractor?
There is no single right percentage: it depends on your profit, your filing status and your state. For the worked example on this page (a single filer in Georgia invoicing $120,000 with $8,000 of expenses) the real bill is $28,406.49, which is 23.67% of everything invoiced, so the calculator says set aside 24%. Someone in a no-income-tax state earning half that would land meaningfully lower; someone in California earning three times as much, higher. Put your own numbers in above rather than trusting a rule of thumb: that is the entire point of the tool.
Is setting aside 25% or 30% enough?
Often, but not reliably, and the failure is asymmetric: being 3 points short on a $120,000 year is roughly $3,600 you have to find in April. A flat 30% is comfortably over for a modest earner in a no-tax state, and can be under for a high earner in a high-tax state. The rules of thumb also quietly disagree about their own base: 25% of profit is a very different number from 25% of revenue. This calculator answers as a percentage of revenue invoiced, because that is the number you can apply to a cheque as it arrives.
What percentage of my income goes to self-employment tax?
Self-employment tax is 15.3% (12.4% Social Security plus 2.9% Medicare) but it applies to 92.35% of your net profit, not to all of it, so the effective bite is about 14.13% of profit. The Social Security half stops once your SE base passes the wage base ($184,500 for 2026), which is why the marginal cost of extra work drops sharply above roughly $199,800 of profit. Medicare has no cap, and an extra 0.9% applies above your filing status’s threshold. That is only the self-employment piece; federal income tax and state tax come on top, which is why the total set-aside is well above 15.3%.
Do I have to pay quarterly, and when are estimated taxes due?
Generally yes, if you expect to owe $1,000 or more. For tax year 2026 the federal due dates are April 15, 2026, June 15, 2026, Sept. 15, 2026, Jan. 15, 2027 (taken from IRS Form 1040-ES). None of them falls on a weekend or legal holiday this year, so none shifts. The fourth payment can be skipped if you file your return by February 1, 2027 and pay the whole balance with it. These are federal dates only; states that collect income tax run their own schedules.
What if my income is uneven through the year?
The even split shown here assumes a steady earning pace. If your income is lumpy (a big project in Q4, nothing in Q1) the annualized income installment method (IRS Publication 505, chapter 2) lets you pay in proportion to when you actually earned, which can cut the early payments substantially. It requires Form 2210 Schedule AI with your return and is not modeled here. The other half of the answer is simpler: because this tool gives you a percentage of each invoice rather than a fixed monthly amount, setting aside as you get paid tracks lumpy income automatically.
Why round the percentage up instead of to the nearest point?
Because rounding down would defeat the purpose. In the worked example the exact figure is 23.67% of revenue; rounding to 24% banks $28,800 against a $28,406.49 bill, leaving you $393.51 ahead. Rounding to the nearest point would have gone the same way here, but at a ratio just above a whole point (say 24.02%) rounding to nearest gives 24% and leaves you short. A tool whose only job is making sure you have the money cannot afford that, so the percentage is always ceiled and the reserve is then recalculated from the rounded figure. The over-reserve is under one percentage point of revenue: parked, not lost.
Does hitting the safe harbor mean I can set aside less?
No, and this is the most expensive misunderstanding in the whole topic. Paying 90% of this year’s tax, or 100% of last year’s (110% if your prior-year AGI was over $150,000), protects you from an underpayment penalty. It does not reduce what you owe. If you reserve down to the safe-harbour minimum you will avoid the penalty and still be short the difference at filing. This calculator deliberately has no prior-year input, because sizing the reserve to a penalty floor is how people end up owing money they have already spent.
Does this include my spouse’s income or withholding?
No. The tool sizes the tax on this self-employment income alone, using your filing status to pick the right brackets and thresholds. If you file jointly and your spouse has a W-2 job with tax withheld from every paycheck, that withholding already covers part of the household bill, so this figure will over-reserve, sometimes substantially. Reserving too much is the safe direction, but if you want the household number you will need to net your spouse’s withholding against it yourself.
What this calculator does not do
A flat percentage of revenue assumes your year holds its shape.The percentage is exactly right if your expense ratio and your income land near what you projected. Federal tax is progressive and the Social Security portion of SE tax stops at a cap, so in a much-bigger-than- projected year the true blended rate drifts and a fixed per-invoice percentage can leave you a little short. The round-up is a cushion, not insurance: if your year changes shape, come back and recompute.
Assumptions are not facts. Your projected revenue and expenses are yours, and the flavour defaults are editorial judgement, nothing more. They carry no source citation and no authority, unlike every tax constant in the engine, which names the document it came from and the date it was checked.
- Safe harbour is about penalties, not the bill. Paying 90% of this year's tax, or 100%/110% of last year's, avoids an underpayment penalty. It does not lower what you owe. This tool deliberately has no prior-year input and always sizes the full projected liability: reserving to a penalty floor is how people end up short at filing.
- A spouse's withholding is not netted off. If you file jointly and your spouse has W-2 tax withheld, part of the household bill is already covered and this figure will over-reserve. Safe direction, but worth knowing.
- Health premiums and retirement contributions are out of scope. Both would reduce the reserve: a self-employed health premium is deductible against income tax under IRC §162(l) (though not against the SE-tax base), and retirement contributions lower taxable income. So leaving them out errs safe. If you carry a large premium or contribute heavily to a solo 401(k), this over-reserves.
- Quarterly dates are federal only. States that collect income tax run their own estimated-payment schedules, which often differ. The annualized income installment method for uneven income is not modeled. The tool sizes the payment; it does not file or pay it.
- Mid-year users may already owe. The schedule marks due dates that have passed against your own clock. If you are only starting to set money aside now, earlier instalments may already be late and an underpayment penalty may already be accruing.
- Expenses are a flat annual dollar figure, not a percentage of revenue: costs that scale with billings (subcontractors, payment fees) are not modeled as such.
- State tax is a flat effective rate, not bracket math: effective rate = income tax collections per capita ÷ per-capita personal income, from the Tax Foundation, Facts & Figures 2026, Table 12 (FY2024); D.C. from Table 13 (FY2023) and the US BEA, SAINC1 per-capita personal income, 2024 annual. It is an average across taxpayers. Local and city income taxes are not included.
- The QBI high-earner phase-out is not computed. The §199A(a) overall limitation is applied, but the separate W-2/UBIA phase-out that begins around $201,750 of taxable income for single filers in 2026 is flagged with a caveat rather than guessed at. If that caveat appears, your real bill may be higher: treat the reserve as a floor. The §199A(i) minimum-deduction rules are not modeled either; they only bind below roughly $2,000 of taxable income.
Tax constants were last verified 2026-07-15 against their primary sources, and the 2026 estimated-tax due dates on 2026-07-22 againstIRS Form 1040-ES. Full methodology on themethodology page.These are estimates for planning, not tax advice.