the margin kitHow much should an Etsy seller set aside for taxes? (US)
If your Etsy shop makes a profit, you owe tax on it whether or not you get a tax form. Here's how to estimate what to save, and when to pay it.
This is general information for US sellers, not tax advice. Rules change and every situation is different, so confirm with a tax professional or irs.gov.
You're taxed on profit, not sales
Tax is based on net profit: sales minus Etsy fees, materials, shipping, ads and other business expenses. That's why good records matter. Every expense you can show lowers the profit you're taxed on.
The two taxes on Etsy profit
- Self-employment tax: 15.3% (Social Security and Medicare) on 92.35% of your net profit. It applies once your yearly net profit from self-employment reaches $400.
- Income tax at your normal bracket, plus state income tax where it applies.
Example: $1,000 of profit
| Net profit | $1,000 |
| Self-employment tax (15.3% × 92.35%) | ≈ $141 |
| Federal income tax at a 12% bracket (roughly) | ≈ $110–120 |
| Rough total | ≈ $250–260 (25–26%) |
A common rule of thumb is to set aside 25–30% of profit, more if you're in a higher bracket or a high-tax state. Move it into a separate savings account every time Etsy pays you out.
Quarterly estimated payments
If you expect to owe $1,000 or more for the year, the IRS expects you to pay during the year, not all in April. The usual due dates for 2026 income are:
| Income earned | Due |
|---|---|
| Jan 1 – Mar 31 | April 15, 2026 |
| Apr 1 – May 31 | June 15, 2026 |
| Jun 1 – Aug 31 | September 15, 2026 |
| Sep 1 – Dec 31 | January 15, 2027 |
If a date falls on a weekend or holiday, it moves to the next business day. A widely used "safe harbor": paying at least 100% of last year's total tax (110% if your AGI was over $150,000) in on-time installments generally avoids the underpayment penalty.
What about Form 1099-K?
Etsy issues a 1099-K when your sales pass the federal reporting threshold, and some states use lower thresholds. Getting a 1099-K or not doesn't change what you owe. All profit is taxable either way.
Deductions sellers often miss
- Etsy fees, Etsy Ads and Offsite Ads fees
- Materials, packaging and shipping labels
- Business mileage (the 2026 IRS standard rate is 72.5¢ per mile)
- Software, a share of phone and internet, photography props
- Craft-fair booth fees and travel
Bookkeeping & Tax Set-Aside
Simple bookkeeping for solo sellers: income, expenses, mileage, monthly P&L and quarterly tax set-aside with due dates.
See the Bookkeeping & Tax Set-Aside · $15 Free fee calculatorFAQ
Do I have to pay taxes on Etsy sales if I don't get a 1099-K?
Yes. Business profit is taxable whether or not you receive a 1099-K. The form only reports gross sales to the IRS.
What percentage should I save for taxes on Etsy?
Many sellers set aside 25–30% of profit (not sales) to cover self-employment tax and income tax. Higher brackets and some states need more.
When are quarterly taxes due?
For 2026 income: April 15, June 15 and September 15, 2026, and January 15, 2027, moved to the next business day if one falls on a weekend or holiday.