2026 tax year · Etsy sellers
How much to set aside for taxes on Etsy
If you sell on Etsy regularly to make a profit, that's a business: the profit owes self-employment tax on top of income tax. Etsy doesn't withhold any of it.
In the worked example below, a full-time Etsy seller in Oregon should set aside 15% of every payout — $15 of every $100.
Set aside from every deposit
15%
≈ per year / per month
$7,200
$600/mo
Rule of thumb: for every $1,000 you earn, set aside $150.
An estimate for planning purposes, not tax advice or a filing. Uses 2026 federal brackets (Rev. Proc. 2025-32), self-employment tax with the §199A (QBI) deduction, and state-level rates (Tax Foundation, 2026). Married-filing-separately filers should use "Single" as the closest estimate. Local income taxes (e.g. NYC, Ohio municipal) aren't modeled and would owe more than shown.
Which tax forms Etsy sends
| Form | What it reports | Threshold (2026) |
|---|---|---|
| 1099-K | Gross sales processed through Etsy Payments | Over $20,000 and over 200 transactions (lower in some states) |
- The 1099-K reports gross sales before Etsy's transaction, listing and payment-processing fees. You're taxed on profit, so those fees — and what you spent on materials — come off the top.
- The federal threshold went back to $20,000 and 200 sales after a few years of changes ($5,000 was used for 2024). Sellers in states with lower thresholds may still get a form.
The form is paperwork, not the trigger: the IRS is explicit that you must report all income whether or not you receive a 1099.
Worked example: a full-time Etsy seller in Oregon
Hypothetical numbers, single filer, 2026 brackets. The calculator above is preloaded with them.
| Amount | |
|---|---|
| Gross Etsy sales | $48,000 |
| Materials | − $11,000 |
| Etsy fees | − $4,900 |
| Shipping & packaging | − $3,600 |
| Net profit | $28,500 |
| Self-employment tax | $4,027 |
| Federal income tax | $831 |
| Oregon income tax | $2,175 |
| Set aside | 15% of income · $600/mo |
Skipping the deductions would push the set-aside to 27% — tracking them is worth about $5,760 a year here. See Oregon's self-employment tax breakdown for how the state part is figured.
Deductions etsy sellers commonly claim
- Materials and cost of goods sold
- Etsy transaction, listing, payment-processing and ads fees
- Shipping labels and packaging
- Equipment, software and a dedicated workspace
When to pay
The next federal estimated payment is due January 15, 2027 and covers income from Sep 1 – Dec 31, 2026.
| Due date | Covers income earned | Payment |
|---|---|---|
| Sep 1 – Dec 31, 2026 | 4th payment for 2026 | |
| Jan 1 – Mar 31, 2027 | 1st payment for 2027 — also the 2026 return deadline | |
| Apr 1 – May 31, 2027 | 2nd payment for 2027 | |
| Jun 1 – Aug 31, 2027 | 3rd payment for 2027 |
Etsy taxes by state
Your state changes the answer. Pick yours for a calculator preset to its 2026 brackets:
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Other platforms
Frequently asked questions
How much should I set aside for taxes on Etsy?
It depends on your profit, filing status and state. In the example on this page — a full-time Etsy seller in Oregon with $48,000 of income and $19,500 of deductions — the answer is about 15% of every payout, or $600 a month. Without tracking those deductions it would be 27%. Enter your own numbers in the calculator above.
Will Etsy send me a 1099?
Form 1099-K (gross sales processed through Etsy Payments): Over $20,000 and over 200 transactions (lower in some states). Whether or not a form arrives, the IRS requires you to report all of the income.
Does Etsy take taxes out of my pay?
No. Etsy sellers are paid as independent contractors, so no income tax or self-employment tax is withheld. You cover it yourself with quarterly estimated payments — the next federal one is due January 15, 2027.
Do I have to pay quarterly taxes on Etsy income?
If you expect to owe $1,000 or more in federal tax for the year after withholding and credits, the IRS expects quarterly estimated payments. Paying too little, too late can mean an underpayment penalty even if you pay in full in April.
Know what to set aside from every Etsy payout
Confirm a Etsy deposit and Fern tracks what to set aside for tax on it — then shows what's safe to spend. Your money stays in your own bank account.
Free on iPhone · Pro from $12.99/mo
Sources
Not tax advice. Fern provides estimates for planning a savings target; it doesn't file returns or replace a tax professional. Figures use 2026 federal brackets and standard deduction (IRS Rev. Proc. 2025-32 as amended by OBBBA), 2026 self-employment tax with the §199A deduction, and 2026 state rates (Tax Foundation). Etsy is a trademark of its owner; Fern isn't affiliated with or endorsed by Etsy. Examples are hypothetical.