Problem. Many writers publish a book, then feel lost on pricing, royalty rules, and taxes. The result? Low earnings and confusion.
Agitation. If you ignore the numbers, you may underprice your book, miss tax steps, and leave money on the table every month.
Solution. This guide shows you how to turn book sales into passive income—from royalty rates and pricing to taxes, risk control, and growth strategies.
Quick Read
- Choose the right platform and format (ebook, paperback, hardcover).
- Price for the 70% KDP eBook tier when you can; mind delivery fees.
- Watch KDP’s 2025 print royalty change (50% for low-priced print books).
- Track royalties and file taxes (royalties usually go on Schedule E).
- Register copyright for legal protection and easier enforcement.
What is Passive Income?
Passive income is money that keeps coming in after the upfront work is done. With books, the heavy lift is writing, editing, and publishing. After that, sales and page reads can earn month after month with limited upkeep—especially when you use print-on-demand and digital stores.
Key Steps for How to Earn Royalties from Self-Publishing in the USA
Step 1: Pick platforms and formats
- Amazon KDP (eBook): Two royalty options—35% or 70% (in eligible price ranges and territories). The 70% plan deducts a small delivery fee based on file size.
- Amazon KDP (Print): As of June 10, 2025, print royalties are 50% of list price for low-priced paperbacks/hardcovers (≤ $9.98 on Amazon.com) and 60% when priced $9.99+, minus printing costs.
- Aggregators (e.g., Draft2Digital): Reach Apple Books, Kobo, and more; typical ebook take-home around ~60% of list price (store ~30% + aggregator ~10%).
Tip: Use KDP’s free Printing Cost & Royalty Calculator to test trim sizes, paper, and pricing before you publish.
Step 2: Set smart prices (with examples)
Goal: Max the 70% eBook tier when it fits your audience.
- eBook example (US):
List $4.99 → 70% of ($4.99 − VAT) − delivery fee ≈ strong margin for most genres. - Paperback example:
If you price $9.99, your royalty rate is 60% (minus print cost). If you price $9.98, it drops to 50% (minus print cost). That 1¢ matters.
When low pricing makes sense: Entry-level nonfiction, short reads, or promo periods to boost reviews and rankings. For eBooks on KDP Select, a Kindle Countdown Deal can keep 70% royalties during the promo window.
Step 3: Handle taxes and paperwork
- Taxes: In the U.S., royalty income is commonly reported on Schedule E (Form 1040). Some authors who run a full publishing business may use Schedule C; talk with a tax pro about your setup.
- Forms you may receive: 1099-MISC for royalties if you’re paid $10+ by a platform.
- Copyright: Registering your book helps with enforcement and statutory damages if infringement occurs. Start at the U.S. Copyright Office registration portal; check current fees before you file.
Smart Strategies
Diversifying Income Streams
- Ebook + paperback + hardcover: Meet different reader preferences and price points.
- Kindle Unlimited (KU): If you enroll in KDP Select, you can earn from page reads via the KDP Select Global Fund (paid monthly based on total pages read). The fund size is posted each month; July 2025 data is available.
- Go wide with an aggregator: Reach Apple, Kobo, and library channels while keeping KDP print for Amazon reach.
Managing Risk
- Price testing: Try $3.99 vs. $4.99 eBook pricing; watch conversion and net royalty.
- Production quality: Invest in editing and a pro cover; rough quality kills reviews and rank.
- Inventory risk: Print-on-demand means no boxes in your garage and lower cash risk. Use calculators to check margins before launch.
Tax Considerations
- Record keeping: Save monthly royalty statements and ad invoices.
- Quarterly estimates: If publishing is a business for you, ask a tax pro about estimated payments.
- Form choices: Understand when to use Schedule E vs. Schedule C based on your activities.
Royalty Options at a Glance
| Format | Platform | Typical Royalty | Key Notes |
|---|---|---|---|
| eBook | KDP | 70% (eligible) / 35% | 70% requires eligible price/territories; delivery fee applies. |
| Paperback | KDP | 60% (≥ $9.99) | Minus printing cost; set price carefully. |
| Paperback | KDP | 50% (≤ $9.98) | New 2025 rule for low list prices. |
| eBook (wide) | Draft2Digital | ~60% of list | Store ~30% + D2D ~10%. |
| KU page reads | KDP Select | Varies monthly | Paid from the KDP Global Fund. |
Example: Upfront Costs & Break-Even
(Illustrative; adjust for your book.)
| Item | Low Budget | Mid Budget |
|---|---|---|
| Editing | $300 | $900 |
| Cover design | $100 | $300 |
| Formatting | $50 | $150 |
| ISBN (optional for KDP) | $0 | $125 |
| Ads/Promos (launch) | $100 | $400 |
| Total | $550 | $1,875 |
Break-even eBook units (list $4.99, 70% net, est. $3.25 after delivery):
- Low budget: $550 ÷ $3.25 ≈ 170 sales
- Mid budget: $1,875 ÷ $3.25 ≈ 577 sales
Use your real delivery fee and taxes for a tighter estimate.
Pros & Cons of Royalty-Based Book Income
| Pros | Cons |
|---|---|
| Scales well once the book is live | Income can be uneven month to month |
| Print-on-demand reduces cash risk | Reviews and marketing still take effort |
| Global reach via major stores | Platform rules and rates can change |
| Many levers: price, formats, promos | Taxes and reporting require attention |
FAQs
Q1: Is KDP Select required for the 70% eBook royalty?
A: No. KDP Select is not required for 70% in many territories; it depends on your price and eligible regions, and the 70% option deducts a delivery fee. Some marketplaces have special rules. Always confirm in KDP help before you publish.
Q2: What changed with KDP print royalties in 2025?
A: For books priced at or below a set threshold (for Amazon.com, $9.98), the royalty rate is 50%, not 60%. Price $9.99+ to keep 60% (before printing costs).
Q3: Where do I report book royalties on my tax return?
A: Royalties are generally reported on Schedule E. If you run publishing as a business, some items may belong on Schedule C—ask a tax professional.
Q4: How are KU page reads paid?
A: Enrolled titles earn a share of the KDP Select Global Fund based on pages read. Amazon announces the fund each month; industry sites track the totals.
Conclusion
Self-publishing can become a steady stream of passive income when you price smart, watch costs, and treat your book like a product. Use the tables and steps above to set your price, protect your rights, and plan your taxes. For regular money tips that actually help, bookmark our Simple Investing Tips and tell us what you’re publishing next—we’re cheering for you.
Kelsey Johnson is a seasoned business writer specializing in strategy, marketing, and entrepreneurship. Her concise, insightful blogs help professionals drive growth and make smarter business decisions.
