Quarterly taxes for gig drivers: how much to set aside and when

By Sabett, founder of MileGravy ·September 6, 2026 ·6 min read

The first year I drove full time, I made good money and spent all of it. April arrived with a number attached and I had nothing set aside for it. That's the standard gig driver story and it's completely avoidable.

Nobody withholds anything from your gig pay. That $1,000 week is gross. Some of it belongs to the IRS and it's your job to keep it separate.

What you actually owe

Two taxes stack on your delivery income.

Self-employment tax. The IRS puts it plainly: "The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security... and 2.9% for Medicare." That's both halves — the part an employer would have paid and the part you'd have paid — because you're both.

It doesn't apply to all of your profit. Form 1040-ES tells you to "use only 92.35% (0.9235) of your total net profit from self-employment." So the effective bite is 15.3% of 92.35%, or about 14.13% of net profit.

For 2026, the social security portion applies to the first $184,500 of combined wages and net self-employment earnings. Medicare has no cap. Very few delivery drivers hit that ceiling, but it's there.

Income tax. On top of that, your profit is ordinary income at whatever bracket you land in, plus state income tax if your state has one. Michigan is 4.25%.

The thing that saves you is that both taxes apply to net profit, not gross pay. Your mileage deduction comes off before either one — which is why a mile is worth more to you than to a W-2 employee, and why the log is the highest-paid paperwork you'll ever do.

The four 2026 due dates

If you expect to owe $1,000 or more when you file, the IRS expects estimated payments through the year rather than one lump in April. Straight off Form 1040-ES (2026):

Note the spacing. Those are not three-month intervals — the second payment lands two months after the first, and the third three months after that. Drivers who assume "quarterly" means every three months miss June 15 constantly.

Late or short payments can trigger an underpayment penalty. The IRS charges it whether or not you meant to be late.

A $1,000 week, all the way through

Here's what one real week looks like. Say you gross $1,000 and drive 600 business miles that week, all after July 1 so they deduct at 76¢.

This is why the mileage log pays for itself. Without those 600 miles, the whole $1,000 would be net profit and the same three taxes would take about $304 of it. The log is worth $139 on one week.

Why 20–25% works for most drivers

Set aside 20–25% of your net profit — gross pay minus your mileage deduction and your other business expenses — and you'll cover most situations.

Look at the example again. The true figure there is 30.4% of net, and 25% would have left a gap. But that calculation ignores your standard deduction, which shelters a large chunk of your income before the 12% bracket touches anything, and it ignores the deduction you get for half your self-employment tax. Run a realistic full-year return for a driver at this income level and the effective rate lands well below the line-item math.

Where 20–25% goes wrong:

• You have W-2 income too. Your gig profit stacks on top of it and can land in a higher bracket. Set aside more.
• You're in a high-tax state. Add your state rate on top.
• You drive very few miles per dollar earned. Less deduction means more of your gross is profit.
• Your income jumped this year. Last year's percentage may not fit.

If any of those describe you, go to 30% and be pleasantly surprised in April. Over-setting aside costs you nothing but patience. Under-setting aside costs you a payment plan.

The safe harbor that ends the guesswork

You don't actually have to predict your year correctly. Form 1040-ES gives you a floor that protects you from the underpayment penalty regardless of how the year turns out.

The general rule: you owe estimated tax for 2026 if you expect to owe at least $1,000 after withholding and credits, and you expect your withholding and credits to be less than the smaller of "90% of the tax to be shown on your 2026 tax return" or "100% of the tax shown on your 2025 tax return." Higher-income taxpayers substitute 110% for that 100%.

Read the second one again, because it's the useful one. If you pay in 100% of last year's total tax, spread across the four dates, you're inside the safe harbor even if you have a monster year and end up owing far more at filing. You'll still owe the difference in April — the safe harbor kills the penalty, not the tax — but you cannot be penalized for underestimating.

For a driver whose income bounces around, that's the simplest possible system: take last year's total tax, divide by four, pay that on each date, and stop trying to forecast. Your 2025 return has to cover all twelve months for this to apply.

The set-aside and the estimated payment are not the same thing

Worth separating, because people conflate them and then panic.

The set-aside is a habit: money leaving your spending account every payout so it's there when you need it. The estimated payment is a transaction: money going to the IRS on four specific dates.

The set-aside account is what funds the estimated payment. If you're moving 25% of net across every week, then on April 15 you just pay out of that account and the money is already there. If you're not, the four dates arrive as four emergencies.

Don't skip the weekly habit because you've got the quarterly dates on a calendar. The calendar tells you when. The habit is what makes the money exist.

State taxes have their own dates

If your state has an income tax, it very likely wants estimated payments too, on its own schedule and its own form. Michigan does. The federal dates are the ones I listed; your state's may or may not match them.

Check your state's revenue department once, set the reminders, and forget it. This is the thing drivers discover in year two, usually by mail.

How to actually make it happen

The mechanics matter more than the percentage, because the failure mode isn't picking the wrong number — it's picking the right number and then spending it.

1. Separate account. A second checking or savings account that exists for this and nothing else. No card attached to it.
2. Move the money on payout day, not at month end. The day the deposit lands, move your percentage across. Every week it sits in your spending account is a week it might get spent.
3. Calculate on net, not gross. Take your gross, subtract your mileage deduction, take the percentage of what's left. Setting aside 25% of gross when your miles are high means starving yourself for no reason.
4. Pay on the four dates. Set calendar reminders for April 15, June 15, September 15 and January 15. You can pay online directly through the IRS.

You need your mileage number to do any of this correctly, which is the whole reason the set-aside and the log are the same problem. The mileage deduction calculator will show you what your miles are worth against your own bracket, and that number is what your set-aside percentage should be calculated after — not before.

The one habit

Move the money the day you get paid. Everything else here is detail. Drivers who do that one thing never have an April problem, and drivers who don't always do.

I drive for a living and I read the IRS pages carefully, but I'm not an accountant and this isn't tax advice. Your return is yours — check anything that matters with a preparer who knows your situation.