If you freelance, drive, deliver, sell online or run any side hustle, nobody withholds taxes from your payments. The money lands in your account whole, and the IRS expects you to set part of it aside yourself. The popular rule of thumb is "save 25%." For some people that's too much; for others, especially anyone with a day job, it's not enough.
Here's how the number actually works in 2026, with real examples.
What you owe on self-employment income
- Self-employment tax: about 14.1% of your profit. It's 15.3% (12.4% Social Security + 2.9% Medicare), charged on 92.35% of your net profit. Social Security only applies up to the 2026 wage base of $184,500 (minus any W-2 wages).
- Federal income tax at your bracket (10%, 12%, 22% and up for 2026), after the standard deduction ($16,100 single, $32,200 married filing jointly), half of your self-employment tax, and usually the 20% qualified business income (QBI) deduction.
- State income tax, if your state has one.
Your profit is what's left after business costs: platform and card fees, supplies, a share of your phone, and business miles (with the standard mileage rate: 72.5 cents a mile from January to June 2026 and 76 cents from July 1). Every dollar of deductible cost lowers the tax.
Real examples (2026, single, no other income, 5% state tax)
| Yearly profit | Self-employment tax | Federal income tax | State (5%) | Set aside |
|---|---|---|---|---|
| $20,000 | $2,826 | $199 | $929 | about 20% |
| $30,000 | $4,239 | $942 | $1,394 | about 22% |
| $50,000 | $7,065 | $2,667 | $2,323 | about 24% |
Have a day job too? Your W-2 salary already uses up the standard deduction and the low brackets, so every side-hustle dollar is taxed at your top rate (often 22%) on top of the self-employment tax. The right set-aside can climb past 30%, unless your paycheck withholding covers part of it.
When to pay: quarterly estimated taxes
If you expect to owe $1,000 or more for the year, the IRS wants estimated payments during the year, not one big check in April. The 2026 due dates are April 15, June 15 and September 15, 2026, and January 15, 2027. You can pay federal estimates at IRS.gov/payments.
To avoid an underpayment penalty, your payments generally need to cover the smaller of 90% of this year's tax or 100% of last year's (110% if last year's AGI was over $150,000).
A simple system that works
- Open a separate savings account just for taxes.
- Every time you're paid, move your set-aside % into it right away.
- Log your expenses and business miles as you go, so your profit (and your tax) stays accurate.
- Pay your quarterly estimates from that account on the due dates.
Skip the math
The HustleLedger Self-Employed Tax Tracker does all of the above for you in Excel or Google Sheets: log your payments, expenses and miles, and it tells you the exact % of every payment to set aside, when your next quarterly payment is due and how much to pay, using the 2026 IRS figures. Stylists and other beauty pros can use the Beauty Pro edition, which tracks tips separately. Both are also available in Spanish.
This article is general information using 2026 IRS figures (Rev. Proc. 2025-32, SSA, IR-2025-128, IRS Announcement 2026-11), not tax advice. The examples are simplified: they use the standard deduction and the simplified QBI deduction and leave out credits and other income. For your exact numbers, talk to a tax professional.