Companion to "Your set-aside percentage."
| Filing status (single / MFJ / head of household) | |
| Expected first-year profit (guess low if the guess is hard; the derived percentage runs slightly high, the preferred direction) | $ |
| State income tax rate, from your state revenue department's site (the 5% in the example is an example, not a default; states run from zero to past eight percent, some tax gross receipts) | % |
| Derivation date |
| Rate | Single, taxable income | Married filing jointly |
|---|---|---|
| 10% | up to $12,400 | up to $24,800 |
| 12% | $12,400 to $50,400 | $24,800 to $100,800 |
| 22% | $50,400 to $105,700 | $100,800 to $211,400 |
| 24% | $105,700 to $201,775 | $211,400 to $403,550 |
| 32% | $201,775 to $256,225 | $403,550 to $512,450 |
| 35% | $256,225 to $640,600 | $512,450 to $768,700 |
| 37% | above $640,600 | above $768,700 |
2026 standard deduction: $16,100 single / $32,200 married filing jointly / $24,150 head of household. QBI deduction: up to 20 percent of qualified business income, phasing down only above about $201,750 taxable income single (roughly double joint); in your first years assume you get it and let software confirm.
| Step | Arithmetic | Result |
|---|---|---|
| Self-employment tax | $50,000 x 92.35% x 15.3% | $7,065 |
| Half of SE tax deducted | $7,065 / 2 | $3,532 |
| Income after SE deduction | $50,000 − $3,532 | $46,468 |
| Subtract standard deduction | $46,468 − $16,100 | $30,368 |
| QBI deduction (the smaller of 20% of business income or 20% of that remainder) | 20% x $30,368 | $6,074 |
| Taxable income | $30,368 − $6,074 | $24,294 |
| Federal income tax | 10% x $12,400 + 12% x ($24,294 − $12,400) | $2,667 |
| Federal total | $7,065 + $2,667 | $9,732 |
| State at 5% (example) | 5% x $50,000 | $2,500 |
| Everything | $9,732 + $2,500 | $12,232 |
$12,232 against $50,000 is 24.5 percent, rounded up to 25. Anchors from the same machinery: $20,000 of profit computes to roughly 20 percent all-in (the standard deduction shelters a small profit); $100,000 pushes income into the 22 percent bracket and the total toward the high twenties; no-income-tax states drop the state slice.
| Step | Arithmetic | Result |
|---|---|---|
| Self-employment tax | $ x 92.35% x 15.3% | $ |
| Half of SE tax deducted | ÷ 2 | $ |
| Income after SE deduction | $ | |
| Subtract your standard deduction | − $ | $ |
| QBI deduction (20% of the remainder, first years) | 20% x $ | $ |
| Taxable income | $ | |
| Federal income tax (your bracket rungs) | $ | |
| State at your rate | % x $ | $ |
| Everything | $ | |
| Everything ÷ profit, rounded UP to the nearest five | % |
Always round up. Rounding 24.5 to 25 costs about $250 of short-term liquidity across the year and buys a covered bill plus a small refund. Write the final percentage next to your transfer rule: deposit lands, percentage moves, remainder runs the business.
| Date | Profit guess | Derived % | Set-aside % (rounded up) | Note |
|---|---|---|---|---|
| $ | % | % | ||
| $ | % | % | ||
| $ | % | % |
Brackets and thresholds adjust every year with inflation; the revenue procedure that publishes them comes out each autumn. A refund means the set-aside worked. A balance due means the percentage needs a look, and only that.