How much should a freelancer set aside for taxes?
When you're employed, tax comes out of every paycheck automatically. When you're self-employed, the full amount lands in your account and the tax bill comes later. The safest habit is to move a fixed percentage of every payment into a separate savings account the day it arrives. That way you never "borrow" from tax money by accident.
A common rule of thumb in the US is to set aside 25–30% of profit. Higher earners and people in high-tax states often need more. If you're just starting out, a higher set-aside is the cautious choice: if you over-save, the extra is a nice surprise when you file.
How this calculator works
- Profit = monthly income − business expenses.
- Total rate = income tax % + state/local % + self-employment %.
- Monthly set-aside = profit (or gross income, if you choose) × total rate. Quarterly is 3 months and yearly is 12 months.
- Per payment: the same rate is applied to a single client payment, scaled by your profit margin when you use the profit option.
Choose gross income if you want a simpler, more cautious rule ("save 30% of everything I invoice"). Choose profit if you track expenses and want a closer estimate.
About the self-employment tax figure (US)
In the US, self-employed people pay Social Security and Medicare themselves. That's the self-employment tax: 15.3% (12.4% Social Security + 2.9% Medicare), applied to 92.35% of net earnings. That works out to roughly 14.1% of profit. The Social Security part stops above a yearly earnings cap, so very high earners pay less overall. You may also be able to deduct half of it from income tax. Outside the US, replace this field with your own social contributions (or 0).
Quarterly estimated taxes
US freelancers who expect to owe $1,000 or more usually pay estimated tax four times a year. The usual due dates are around April 15, June 15, September 15 and January 15. The quarterly figure above is a simple way to see what each payment might be. Many other countries have their own advance-payment schedules (for example UK payments on account in January and July). Check the dates that apply to you.
Tips that make tax time painless
- Open a separate savings account just for tax and give it a boring name like "NOT MY MONEY."
- Transfer the set-aside the day a client pays. Don't wait for the end of the month.
- Re-check your rate every quarter. If income jumps, your effective rate can go up too.
- Budget from what's left after tax. Our irregular income calculator and budget calculator both start from after-tax money.
Frequently asked questions
What percentage should I save for taxes as a freelancer?
Many US freelancers save 25–30% of profit as a starting point. Your real rate depends on your income, deductions, state and filing status, so use a tax professional or last year's return to set your own percentage.
Should I calculate tax on gross income or profit?
Income tax and self-employment tax are generally based on profit (income minus deductible business expenses). Saving a percentage of gross income is simpler and more cautious, which is why some freelancers prefer it.
Is this calculator tax advice?
No. It's a planning tool that multiplies your numbers by the rates you type in. It doesn't apply tax brackets, deductions, credits or caps. Always confirm with a qualified tax professional.
Does it work outside the United States?
Yes. Pick your currency and enter your own income tax and social contribution rates. Use 0 for any field that doesn't apply where you live.
What do I do if I saved too much?
Nothing bad happens. After you file, move the extra into your emergency buffer, savings goals or extra debt payments.
These calculators are for education and planning. Results are estimates based on the numbers you enter and are not financial, tax or legal advice. See our disclaimer.