Quarterly taxes for gig work: the 25-30% rule

Nobody withholds taxes from gig pay. The IRS still expects its share four times a year — and the drivers who get surprised in April are almost always the ones who skipped the quarterly rhythm. Here's the system, in plain terms.

The 25–30% rule

Set aside 25–30% of your net profit — earnings after mileage and expenses, not your gross. That range covers the two taxes gig work triggers:

• Self-employment tax — 15.3% on net profit (Social Security + Medicare, both halves, since you're both employer and employee)
• Federal income tax — your bracket's rate on top, minus deductions and credits

Big mileage deduction? You can land near the bottom of the range. State income tax? Aim higher. The point isn't precision — it's never touching money that was never yours.

When to pay

Estimated payments are due four times a year — for 2026 income, the federal deadlines fall in April, June, and September 2026, and January 2027. Miss them and pay everything in April instead, and the IRS adds an underpayment penalty — interest on money that arrived late, even if you pay in full.

The safe-harbor shortcut

Don't want to estimate every quarter? Pay 100% of last year's total tax across the four payments (110% for higher incomes), or at least 90% of what you'll owe this year, and you're generally protected from the penalty regardless of how the year turns out.

What happens if you don't

Nothing dramatic — just an invoice you didn't need. The penalty accrues quarter by quarter, so even starting mid-year beats not starting. The real damage is psychological: an April bill for a full year of untaxed income is how drivers end up financing tax debt at card rates.