PayoutTaxTopstep payout taxes in California
Updated November 8, 2026 · For the 2026 tax year
A Topstep payout has no tax withheld, federal or California. On top of federal income tax and self-employment tax, California taxes it at its graduated rates. For a single filer with a $70,000 day job, a $5,000 payout needs $2,100.51 set aside.
PayoutTax isn't affiliated with Topstep. The Topstep details below come from its help pages, as summarized in the Topstep tax guide; the California figures come from the PayoutTax 2026 tax tables, each linked to the state source.
How Topstep reports your payouts
Topstep emails a Form 1099-NEC to US citizens. It sent the 2025 forms on January 31, 2026, to US citizens with over $600 in payouts, and says to check your spam folder if yours doesn't show up. Questions about the form go to 1099support@topstep.com. For payments made in 2026 the IRS threshold is generally $2,000, and Topstep's page doesn't say which line it will use for 2026 payouts. Either way, a payout with no form is still California income.
Topstep collects a W-9 from US citizens, and a US single-member LLC can receive payouts (C-corps, S-corps and multi-member LLCs can't). The form shows your gross payout, before processing fees.
How California taxes a payout
California taxes income on graduated brackets, from 1% to 12.3% for a single filer in 2026 (FTB Tax News, 2026 Indexing), plus a 1% Behavioral Health Services Tax on taxable income over $1,000,000 (2026 Form 540-ES instructions). The calculator subtracts the $5,900 standard deduction for a single filer. California starts from federal AGI, so the deductible half of self-employment tax lowers California income too (Schedule CA instructions, line 15).
California's exemption credits come off the tax whether or not you have payouts, so they don't change the tax on a payout and the calculator leaves them out. The FTB says the complete 2026 figures come out in late December; I'll re-check these brackets against the 2026 Form 540 booklet then.
| Taxable income (single) | 2026 rate |
|---|---|
| $0 to $11,456 | 1% |
| $11,456 to $27,157 | 2% |
| $27,157 to $42,861 | 4% |
| $42,861 to $59,498 | 6% |
| $59,498 to $75,197 | 8% |
| $75,197 to $384,109 | 9.3% |
| $384,109 to $460,927 | 10.3% |
| $460,927 to $768,213 | 11.3% |
| Over $768,213 | 12.3% |
How much to set aside in California
Single filer, $70,000 of W-2 wages, no trading costs, one payout in 2026. These are the calculator's numbers.
| Payout | California tax | Set aside | Share |
|---|---|---|---|
| $1,000 | $74.35 | $420.10 | 42.01% |
| $5,000 | $371.74 | $2,100.51 | 42.01% |
| $10,000 | $743.48 | $4,201.01 | 42.01% |
| $25,000 | $2,016.48 | $10,660.31 | 42.64% |
| $50,000 | $4,177.23 | $21,464.88 | 42.93% |
The share rises from 42.01% to 42.93% as bigger payouts reach higher California brackets.
A $5,000 payout, line by line
| Tax on the payout | California | Texas |
|---|---|---|
| Federal income tax | $1,022.29 | $1,022.29 |
| Self-employment tax | $706.48 | $706.48 |
| State income tax | $371.74 | $0.00 |
| Set aside | $2,100.51 | $1,728.76 |
| Share of the payout | 42.01% | 34.58% |
The lines can differ from the total by a cent, because the calculator rounds only at the end. The same payout in Texas is shown for comparison.
Topstep's $500 example in California
Topstep's help page uses a $500 payout request with a $30 processing fee: the 1099-NEC shows $500 and you receive $470. Topstep says to deduct the $30 as a business expense on Schedule C. For a single filer in California with a $70,000 day job, the calculator puts the set-aside at $197.45 once the fee is counted, against $210.05 if you forgot it. Payouts through Wise have no processing fee, so the form and your deposit match.
If Topstep is your only income
With no day job, the deductions that a wage would use up come off your payouts instead, including California's $5,900. On $60,000 of payouts, California tax is $1,476.75 and the whole set-aside is $14,465.81, or 24.11%.
Paying it during the year
The 1099-NEC arrives after the year ends, but the tax is due during the year. The next federal estimated payment is due January 15, 2027 (the January payment guide explains it), and payouts go on Schedule C and Schedule SE when you file. California estimated payments have their own rules; PayoutTax's quarterly amounts cover federal tax only.
What the estimate leaves out for California:
- CA tax uses its 2026 brackets, deductions and personal exemptions or credits only (no dependents, other credits or local taxes).
- Does not include the qualified business income (QBI) deduction, credits, other income or itemized deductions. You may qualify for the QBI deduction, which would lower the federal tax; ask your CPA.
Run your own wages, costs and payouts in the free calculator, or read the California guide. The set-aside table by state compares every state on a $1,000 payout.
These examples are for one situation, and yours will differ. Estimate only, not tax advice. Confirm with a CPA.
Topstep in other states
Texas, Florida, New York, Pennsylvania, Illinois, Georgia, North Carolina, Michigan and New Jersey.
Other prop firms in California
Tradeify, MyFundedFutures, FundedNext Futures and Bulenox.
Sources
- Topstep, Funded Trader Tax Questions: who gets a 1099-NEC, the 2025 send date, gross payouts and fees, W-9, LLC rules. Read November 6, 2026
- IRS, Am I required to file a Form 1099 or other information return?: $2,000 threshold for 2026
- California, 2026 brackets (ftb.ca.gov)
- California, surtax (ftb.ca.gov)
- California, starts from federal AGI (ftb.ca.gov)
- IRS, 2026 Form 1040-ES: self-employment worksheet and federal due dates
- PayoutTax 2026 tax tables: every figure the calculator used, each with its source
General information, not tax advice. This guide explains common rules for US funded traders; your situation may differ. It isn't a substitute for a licensed CPA or IRS enrolled agent, so review your own numbers with one before you file or pay.