November 15, 2024·7 min read

How Much Should You Set Aside for 1099 Taxes?

The single most useful number for any 1099 worker is the set-aside percentage: the share of every payout that should go straight into a separate tax savings account. Get it right and April is uneventful; get it wrong and you face penalties, interest, and a five-figure surprise bill.

The short answer

Most 1099 gig workers should set aside 20–30% of net earnings (gross minus business expenses). The exact figure depends on three variables: your state, your other income, and how mileage-heavy your work is.

Why 25–30% is the safe default

Self-employment tax alone is 15.3% on 92.35% of net SE income — roughly 14.1%. Add federal income tax (10–24% for most gig workers after the standard deduction) and state tax (0–9.3%), and the all-in liability typically lands in the low- to mid-20s as a share of net.

Set-aside by situation

Part-time side gig, low-tax state

≈18–22% of net. Example: a Dasher in Florida earning $8,000/year.

Full-time, no-income-tax state

≈22–26% of net. Example: a full-time Uber driver in Texas.

Full-time, high-tax state

≈28–32% of net. Example: a freelancer in California or New York.

Freelancer with W-2 spouse

Marginal rate matters more than average — use 30–35% to be safe, especially if household income pushes into the 24% bracket.

Set aside from gross or from net?

Always net — meaning after mileage and business expenses. Setting aside 25% of gross when mileage is your single biggest deduction means you'll over-withhold by thousands and starve cash flow for no reason.

Where to keep the set-aside

Open a separate high-yield savings account labeled 'Taxes.' Move the set-aside on the same day each payout lands. Pay quarterly estimates from this account so the money never feels like spending cash.

Calculate your exact number

A blanket 25% is a fine default, but a real calculator that knows your state, mileage, and income beats a rule of thumb. Our free 1099 tax calculator returns a personal set-aside percentage in seconds — no signup, no data leaves your browser.

Frequently asked questions

+Is 30% enough to set aside for 1099 taxes?

For most gig workers earning under $75,000, yes — 30% of net self-employment income covers federal, state, and SE tax with margin. High earners in high-tax states may need 32–35%.

+Should I set aside taxes before or after deducting mileage?

After. Mileage is your biggest deduction; setting aside based on gross dramatically over-withholds and hurts cash flow.

+What account should I keep tax savings in?

A separate high-yield savings account in your name (not a joint account) so the money is mentally and physically isolated from spending cash.