Etsy Tax Calculator
If you sell on Etsy regularly to make money, it’s a business: you pay self-employment tax and income tax on your profit, after costs. On $40,000 of earnings, that means setting aside about $4,319 for federal tax in 2026.
Set aside about
11% of your earnings
$4,319 total tax on $26,000 net profit
| Self-employment tax | $3,674 |
|---|---|
| Federal income tax | $645 |
| State & local income tax | $0 |
| Includes a QBI deduction of | $1,613 |
| Tax on your 1099 income | $4,319 |
Quarterly estimated payments
- Apr 15, 2026 $1,080 to the IRS + $0 to your state
- Jun 15, 2026 $1,080 to the IRS + $0 to your state
- Sep 15, 2026 $1,080 to the IRS + $0 to your state
- Jan 15, 2027 $1,080 to the IRS + $0 to your state
With a W-2 job, the amounts above are the extra tax caused by your 1099 income. The IRS payments also cover any shortfall in your job’s federal withholding.
Federal tax bracket 10%. Paying at least 100% of last year’s total tax in quarterly installments (110% if your income was over $150,000) protects you from IRS underpayment penalties.
How much to set aside from Etsy pay
| You earn per month | Set aside per month | Share of earnings |
|---|---|---|
| $1,500 | $138 | 9% |
| $3,000 | $313 | 10% |
| $5,000 | $600 | 12% |
| $8,000 | $1,049 | 13% |
Federal self-employment and income tax for a single filer with no other job, with typical business costs. Add state tax where it applies.
How the tax on $40,000 of Etsy pay works out
- Start with your profit. $40,000 of earnings, minus $14,000 of other costs, leaves $26,000.
- Self-employment tax. Social Security and Medicare on that profit come to $3,674.
- Federal income tax. After half of that tax, the standard deduction and the $1,613 QBI deduction, $6,451 is taxable, which comes to $645.
- Set aside the total. $4,319 a year, or about $1,080 a quarter, plus any state income tax.
Etsy tax forms
Etsy sends a Form 1099-K if your sales pass $20,000 and 200 transactions in the year. Profit below that is still taxable.
What Etsy sellers can deduct
- Etsy listing, transaction, payment processing and advertising fees
- Materials and supplies used to make what you sell
- Shipping labels and packaging
- Equipment, software and a home office used for the shop
Good to know
- Enter your sales as income and all your shop costs as expenses; tax is due on the profit.
- Sales tax Etsy collects and pays to states isn’t your income.
- Selling a few personal items at a loss isn’t a business and usually isn’t taxable.
Frequently asked questions
How much should I set aside for taxes from Etsy?
For federal tax, Etsy sellers typically need to set aside about 9% to 13% of what they earn, depending on how much they make, plus more in states with an income tax. For example, $40,000 of Etsy earnings works out to about $4,319 of federal tax in 2026, or 11% of earnings.
Do I have to pay taxes on Etsy if I made less than $2,000?
Yes. The $2,000 limit only decides whether Etsy has to send you a 1099-NEC. All your earnings are taxable, and you owe self-employment tax once your net profit reaches about $433.
What can Etsy sellers deduct?
Ordinary and necessary business costs, such as etsy listing, transaction, payment processing and advertising fees, materials and supplies used to make what you sell, shipping labels and packaging. Keep receipts for everything you deduct.
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Have income from several apps? Add it all up in the 1099 tax calculator, or see just your Social Security and Medicare with the self-employment tax calculator.
Sources
Estimates only, not tax advice. WageSimply isn’t affiliated with Etsy. Your actual tax depends on your full return.
Built and checked by the WageSimply team, led by Engr. Zakir, an engineer and Google-certified data analyst. Updated for the 2026 tax year and last reviewed .