How Much to Set Aside for Taxes as a Freelancer (With Calculator)
The short answer most freelancers hear is "set aside 25 to 30 percent." That is a decent rule of thumb for a middle income, but the right number depends on your profit, not your revenue. This guide shows where the percentage comes from, walks through one real calculation, and links to a calculator so you can run your own numbers.
General information for US federal taxes only, tax year 2026 figures as we understand them when we wrote this. It is not tax advice. State taxes, credits and your own situation change the answer. Check the IRS site or a tax professional before relying on any number here.
The two taxes you are setting aside for
A freelancer in the US generally owes two federal taxes on profit:
- Self-employment (SE) tax. This is Social Security plus Medicare, which employees split with an employer and you pay both halves of. The rate is 15.3 percent: 12.4 percent Social Security and 2.9 percent Medicare (IRS). It applies to 92.35 percent of your net profit, and the Social Security part stops at an annual wage base cap.
- Federal income tax. It is charged on your taxable income after the standard deduction, half of your SE tax (which you can deduct), and other adjustments.
Profit means income minus business expenses. Tracking expenses well lowers both taxes, which is the main practical reason freelancers use accounting software.
Worked example: $80,000 of profit, single filer
These are illustrative numbers using the 2026 federal figures built into our calculator (standard deduction and brackets are listed on the calculator page). We left out state tax, the qualified business income deduction and credits.
| Step | Calculation | Amount |
|---|---|---|
| Net profit | given | $80,000 |
| SE tax base | 80,000 × 92.35% | $73,880 |
| SE tax | 73,880 × 15.3% | $11,304 |
| Deductible half of SE tax | 11,304 ÷ 2 | $5,652 |
| Adjusted gross income | 80,000 − 5,652 | $74,348 |
| Taxable income | 74,348 − 16,100 standard deduction | $58,248 |
| Income tax | 10% to $12,400, 12% to $50,400, 22% above | about $7,527 |
| Total federal | 11,304 + 7,527 | about $18,831 |
| Set-aside rate | 18,831 ÷ 80,000 | about 23.5% |
So at $80,000 of profit the rule of thumb of 25 percent is close (we get about 23.5 percent). At $40,000 of profit the share is lower, and at $150,000 it is higher, because income tax brackets climb while SE tax is a steady percentage up to the cap.
Why profit, not revenue
If you billed $100,000 and spent $20,000 on legitimate business costs, your profit is $80,000 and that is the base. Set aside a percentage of each payment received minus the expenses you expect to deduct, not of the gross. A simple routine:
- Open a separate savings account just for taxes.
- When a client pays you, move your set-aside percentage the same day.
- Revisit the percentage each quarter using year-to-date profit.
Estimated tax payments
If you expect to owe at least $1,000 for the year, the IRS generally expects quarterly estimated payments instead of one bill in April. The usual due dates are mid-April, mid-June, mid-September and mid-January. To avoid an underpayment penalty, a common safe harbor is paying at least 90 percent of this year's tax or 100 percent of last year's tax (110 percent if your adjusted gross income was above $150,000). Confirm the current rules at IRS.gov.
What can lower the number
- Business expenses: software, equipment, a share of internet and phone, professional fees, travel for work. Keep receipts.
- Retirement contributions: a SEP IRA or solo 401(k) can reduce taxable income.
- Health insurance premiums for the self-employed may be deductible.
- Home office deductions apply only if the space is used regularly and exclusively for business.
None of these is guaranteed to apply to you. A tax professional can tell you which do.
Try the calculator
Our tax set-aside calculator runs the same math as the table above. Enter your expected profit and it returns SE tax, income tax and a percentage to move to savings each time you get paid.
Tracking it without a spreadsheet
Once you have more than a handful of clients, tracking income, expenses and tax estimates by hand gets error-prone. Tools like FreshBooks and QuickBooks Online produce profit reports and tax summaries from your invoices and expenses. We compare them using their published pricing in FreshBooks vs QuickBooks for solo freelancers.