When a company pays you on a 1099, the whole check lands in your account. Nobody held back federal income tax, nobody held back Social Security and Medicare, and nobody held back state tax. All of that is still owed. It just isn’t paid yet.
That’s why the first year on a 1099 hurts so many techs. The checks look bigger than a W-2 job would pay, the money gets spent like a paycheck, and then April shows up with a bill for thousands of dollars that has to come out of money you already spent.
The fix is boring and it works: every time a check lands, move a set share of it into a separate savings account you don’t touch. This guide covers how big that share should be and why.
The short version: 25% to 33%
Most field techs who set aside somewhere between 25% and 33% of every check have enough when the taxes come due. The low end works for techs with big work expenses and low or no state tax. The high end covers almost everyone, including people in higher-tax states and people whose expenses are small.
Tech Tax Helper uses 33%. It’s on the safe side on purpose. If you over-save, the extra is yours to keep in April. If you under-save, you’re stuck finding the money or setting up a payment plan with the IRS, and that costs extra.
What that money actually pays for
On a 1099 you pay three things out of what you set aside:
- Self-employment tax. This is Social Security and Medicare. On a W-2 job your employer pays half and you pay half without noticing. On a 1099 you pay both halves: 15.3% on most of your profit. For most techs this is the biggest piece. How self-employment tax works.
- Federal income tax. The same income tax everyone pays, figured on your profit after the standard deduction and a few other breaks.
- State income tax, if your state has one. Nine states have no wage income tax at all. Others run from a few percent to over 10% at the top.
A worked example
Here’s a single tech with no other income, living in a state with a flat 4.4% income tax (Colorado’s rate), for the 2026 tax year. The numbers are rounded.
Checks from all companies: $72,000
Work costs (tools, meters, miles, phone, chargebacks): $12,000
Profit: $60,000
—
Self-employment tax: about $8,480
Federal income tax: about $3,560
State income tax: about $1,750
Total owed: about $13,790
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33% of every check set aside: $23,760
Left over in April: about $9,970
Two things stand out. First, the tax works out to about 19% of the checks and 23% of the profit, which is a lot less scary than most techs expect, because the standard deduction and the small-business break take a real bite out of the income tax. Second, setting aside 33% of every check leaves a cushion. That cushion is there because life doesn’t follow the example: a good year, a second company, a spouse’s income or a smaller expense year all push the bill up. The full math behind this example.
Why a percentage of the check and not of the profit
The tax is figured on profit, but you don’t know your profit until the year is over. You do know what the check says the day it lands. Setting aside a share of the check is simple enough to actually do every time, and because it’s figured on the bigger number, it builds in some safety.
If you keep good records of your work costs, the gap between “33% of checks” and “what you actually owe” grows in your favor. That’s one more reason to keep every receipt. What counts as a work cost.
When less than 33% is fine
- You live in a state with no income tax (Texas, Florida, Tennessee, Washington, Nevada, South Dakota, Wyoming, Alaska, New Hampshire).
- Your work costs are a big share of your checks. Techs who drive their own truck all day often have large mileage numbers.
- Your total profit is modest and you’re single with no other income.
Even then, don’t drop below about 25% until you’ve done one full year on a 1099 and seen what the real bill was.
When you might need more
- You’re married and your spouse has a good W-2 income. Your 1099 profit gets stacked on top of theirs, so it’s taxed at a higher bracket.
- You also have a W-2 job and the 1099 work is on top of it.
- You live in a high-tax state such as California, New York, Oregon or Minnesota and your profit is well into six figures.
In those cases 33% is usually still close, but it’s worth having a tax preparer look at last year’s return once and give you a number.
Where to put it
Open a second savings account, at your bank or an online bank, and name it “Taxes.” Move the set-aside amount the same day the check hits. Not at the end of the week, not when you get around to it. The day it lands. The money in that account isn’t yours. It belongs to the IRS and your state; you’re just holding it until it’s due.
Don’t sit on it until April. The IRS expects 1099 taxes in four payments during the year, not one. If you wait until April, you’ll owe a small penalty on top. When the four payments are due.
Doing it without thinking about it
The hardest part isn’t the math. It’s doing it every single check for a whole year. That’s what Tech Tax Helper is for: tap the button for the company that paid you, type the amount, and it tells you exactly what to move into savings and what’s yours to spend. Before each due date it tells you what to send the IRS and what to send your state.
This is general information about U.S. federal taxes, not advice for your situation. If something here doesn't match your paperwork, ask a tax preparer.