Self-Employed Tax Tracking: What to Record and How Much to Set Aside (2026)

When you work for yourself, nobody withholds tax from your pay. That means two jobs that an employer would normally handle fall to you: keeping records of what you earn and spend, and paying tax during the year rather than all at once. Neither is complicated once you have a routine. This guide covers what to track, the key 2026 dates and numbers, and a simple way to set money aside.

Who this applies to

If you're a freelancer, independent contractor, gig worker or sole proprietor in the US, the IRS says you generally must file Schedule SE and pay self-employment tax if your net earnings from self-employment are $400 or more. That applies to side jobs and part-time work too. You must also report all your income, even payments that don't come with a Form 1099.

What to track

1. Income

Record every payment: date, client or platform, amount, and what it was for. Note whether it's been paid or is still outstanding. Keep this separate from personal money if you can; a dedicated bank account makes records much easier to follow. At the start of the year, compare any Forms 1099 you receive against your own records.

2. Expenses

Sole proprietors report business income and expenses on Schedule C. Organising your expenses by the Schedule C categories as you go (advertising, car and truck expenses, office expense, supplies, travel, and so on) saves a lot of sorting at year end. For each expense, keep the date, vendor, amount, category, business purpose and the receipt.

Two details catch people out:

• Mixed-use items. If something is used partly for personal purposes (a phone, internet), you can generally only deduct the business portion. Record the percentage you use for business and how you worked it out.
• Meals. Business meals are generally only 50% deductible, and there are conditions. See IRS Publication 463 for details.

3. Mileage

If you drive for business, you can generally deduct either your actual car expenses or use the IRS standard mileage rate. For 2026, the IRS business standard mileage rate is:

The IRS raised the rate midyear, so the rate depends on the date of each trip. For example, 300 business miles in March would be 300 × $0.725 = $217.50, while 300 miles in August would be 300 × $0.76 = $228.00. For each trip, log the date, starting point and destination, business purpose and miles. A log written at the time is far more reliable than one rebuilt from memory in April.

How self-employment tax works

Self-employment tax is how self-employed people pay Social Security and Medicare. The rate is 15.3% (12.4% Social Security plus 2.9% Medicare), and it's calculated on 92.35% of your net self-employment earnings. The Social Security part only applies up to an annual limit, which is $184,500 for 2026 according to the 2026 Form 1040-ES.

A simplified example: with $10,000 of net profit, self-employment tax would be about $10,000 × 0.9235 × 0.153 = $1,412.96. You can generally deduct half of your self-employment tax when working out your adjusted gross income.

That's on top of regular income tax, which depends on your total income, filing status, deductions and credits, plus any state income tax.

Estimated tax: when to pay

The IRS says you generally need to make estimated tax payments if you expect to owe at least $1,000 in tax for the year after subtracting withholding and refundable credits. The year is split into four payment periods, and they aren't equal quarters:

If you don't pay enough by each due date, you may owe a penalty even if you get a refund when you file. The IRS describes "safe harbor" thresholds based on 90% of this year's tax or 100% of last year's (110% if last year's adjusted gross income was over $150,000, or $75,000 if married filing separately). The rules have details and exceptions, so read the IRS estimated tax pages or Form 1040-ES before relying on them.

How much to set aside

There's no single correct percentage; it depends on your income, deductions, state and household. A practical approach:

1. Estimate your self-employment tax using the formula above.
2. Estimate your federal income tax on your expected profit. Your previous year's return and the worksheet in Form 1040-ES are good starting points.
3. Add any state income tax.
4. Divide the total by your expected profit to get a set-aside percentage, and move that share of every payment into a separate savings account as it arrives.

Review the percentage each payment period. If your income changes a lot, recalculate. It's usually easier to have a little left over at the end of the year than to come up short.

A simple monthly routine

• Weekly or as it happens: log income, expenses and trips. Photograph receipts.
• Monthly: check that your records match your bank statement and move your tax set-aside.
• Before each due date: total profit for the period, update your estimate and make your payment through IRS.gov/payments or another IRS-approved method.
• At year end: total each Schedule C category and your mileage, and gather your 1099s.

Sources

• IRS, Standard mileage rates (2026 rates, IR-2025-128 and IR-2026-29)
• IRS, Notice 2026-10 (2026 standard mileage rates)
• IRS, Self-employment tax (Social Security and Medicare taxes)
• IRS, 2026 Form 1040-ES (due dates, 92.35%, Social Security limit)
• IRS, Estimated tax FAQs for individuals (payment periods, $1,000 and safe harbor rules)
• IRS, Manage taxes for your gig work (reporting all income)
• IRS, Publication 463 (travel, meals, car expenses and records)