Two different bills quietly come out of your Etsy income: the fees Etsy takes on each sale, and the taxes you owe at the end of the year. Sellers who don't plan for both end up short — either surprised by a smaller payout, or scrambling in April. Here's a practical way to decide how much to set aside for each in 2026, and how to move from a rough rule of thumb to your own real numbers.
These are two separate things — don't blend them
Etsy fees are taken automatically, per order, before the money reaches you. Taxes are not withheld at all — Etsy pays you the after-fee amount, and it's on you to save for the tax bill yourself. The most common mistake is treating your Etsy deposit as "money I get to keep." It isn't: a chunk of it still belongs to the tax authority. Budget for them separately.
Set aside for fees: 10–20% of each order
Etsy's standard fees on a typical order add up to roughly 10–15% for a US seller. That's the three fees on nearly every sale: a $0.20 listing fee, a 6.5% transaction fee, and payment processing of 3% + $0.25 in the US. Two things push you toward the higher end — or past it:
- Offsite Ads. If Etsy placed the ad that led to a sale, it adds 15% (or 12% once you pass $10,000 in sales over a year), capped at $100 per order. On the orders it hits, that alone can take your total fee to 20–25%.
- Selling from outside the US. Higher payment-processing rates, a regulatory operating fee, a 2.5% currency conversion fee, and VAT charged on the fees themselves all stack up — pushing international sellers to 15–20% before ads.
A safe planning number: set aside 15% of each order for fees if you're a US seller who doesn't run ads, and 20% if you use Offsite Ads or sell internationally. Since fees come out automatically, this is really about pricing — building the fee into your price so the after-fee amount still covers your costs and profit. (For the full fee list, see how much does Etsy take from a sale.)
Set aside for taxes: about 25–30% of your net profit
In the US, the two taxes that matter for most Etsy sellers are self-employment tax and income tax, and both are charged on your net profit — not your gross sales. Net profit is what's left after both Etsy's fees and your own costs (materials, shipping you paid, supplies).
Self-employment tax is 15.3% (12.4% Social Security + 2.9% Medicare), applied to about 92.35% of your net earnings, and it kicks in once your net is $400 or more for the year. On top of that you owe federal income tax at your bracket, plus any state income tax. Because the income-tax piece depends on your total household income and bracket, a widely used planning rule is to set aside 25–30% of your net profit for taxes. Lower earners may need less; higher brackets or high-tax states may need more. This is general information, not tax advice — check with an accountant for your situation.
One relief: legitimate business expenses lower the profit you're taxed on, so good records shrink the bill. See Etsy tax deductions and the fuller picture in do you have to pay taxes on Etsy income. If your combined self-employment and income tax will top $1,000 for the year, the IRS expects quarterly estimated payments rather than one April lump sum.
The trap: setting aside off the wrong number
Both rules only work if you apply them to the right figure. Set your tax aside off your gross Etsy sales and you'll over-save (or panic); set it off a "net" number that forgot Offsite Ads or your material costs and you'll under-save. The hard part isn't the percentage — it's knowing your true net profit, because Etsy's fees are scattered across your payment ledger by date, not summed up per product, and the collected sales tax inflates your gross. That's exactly the number you need to get both set-asides right. (For pricing that bakes the fee in from the start, see how to price Etsy products for profit.)
Get the number both rules depend on
You can estimate the fees on any single order with our free Etsy fee calculator. But a calculator can't tell you your real net profit across a whole shop — the figure you actually set money aside against. That's what Seller Profit Lens does: it connects to your shop read-only, reads the fees Etsy actually charged to the cent, strips out pass-through sales tax, subtracts your own costs, and shows real profit per product — so you know exactly how much to hold back for fees and taxes instead of guessing. It's in free beta now. Join the waitlist →