How much should you set aside for taxes as a freelancer?

Ask this anywhere freelancers gather and you will be told 30%. It is decent folk wisdom: it errs on the safe side, which is the correct direction to err.

But run the actual numbers and something surprising falls out. For federal tax alone, 30% is more than you need at every income level a typical freelancer will see. The rule only becomes right — and then quickly not enough — once you add the two things it silently assumes away.

Why one percentage cannot fit everyone

Your federal tax is two separate taxes stacked on each other, and they move in opposite directions as income rises.

Self-employment tax is 15.3% of 92.35% of your profit — about 14.1% of the headline number. It is nearly flat, then drops sharply once you pass the Social Security wage base ($184,500 of net earnings in 2026), because the 12.4% Social Security portion stops there and only the 2.9% Medicare portion continues.

Income tax does the opposite. It starts at nothing — the standard deduction means a single filer’s first $16,100 is untaxed — and climbs through the brackets.

One falling, one rising. No single flat percentage can be right across that.

What the arithmetic actually says

A single filer, no other income, no state tax, taking the standard deduction and the QBI deduction, in 2026:

Net profit	Self-employment tax	Federal income tax	Total	Share of profit
$30,000	$4,239	$942	$5,181	17%
$60,000	$8,478	$3,559	$12,037	20%
$100,000	$14,130	$8,235	$22,365	22%
$150,000	$21,194	$16,413	$37,608	25%
$250,000	$29,851	$37,103	$66,954	27%

Even at a quarter of a million dollars of profit, federal tax is 27% — still under the rule of thumb. At $40,000 the real figure is 18.6%, meaning 30% sets aside about $4,600 more than you owe.

That overshoot is not harmless. It is your own money, sitting idle for a year, at an income level where you may well have needed it.

The two things the 30% rule quietly assumes

State income tax. Everything above is federal. California, New York, New Jersey and Oregon can add 6–10% at freelance income levels. Texas, Florida, Washington, Nevada, Tennessee, South Dakota, Wyoming and Alaska add nothing at all. This single variable — determined entirely by your address — is what turns 22% into 30%.

Other household income. If you have a salaried job, or a spouse who does, your business profit does not start at the bottom of the brackets. It lands on top of everything else and is taxed at your marginal rate from the first dollar.

Take $60,000 of freelance profit. On its own, it costs about 20%. Alongside a $120,000 salary, the same $60,000 costs 31.9% — because it is being taxed in the 24% bracket rather than working its way up from zero.

That is the same profit, the same work, and half again as much tax. It is also the single most common reason freelancers get a nasty surprise in April.

A better rule than 30%

Pick from where you actually sit, then add your state on top:

• Under $50,000 profit, no other income — 20% covers federal comfortably.
• $50,000–$150,000, no other income — 22–27%.
• Above $150,000 — 27–30%, and start looking seriously at a solo 401(k). At that level, retirement contributions are the most effective lever you have.
• Any freelance income alongside a salary — ignore the averages entirely and think in marginal terms. If the salary already puts you in the 24% bracket, budget around 32%. In the 32% bracket, closer to 38%.
• In a state with income tax — add its rate to any of the above. This is what finally makes 30% the right answer for a lot of people.

Where to put it

The mechanics matter more than people expect, because the failure mode is never miscalculating. It is spending it.

Open a separate savings account and move the money the day each payment lands, not at month end. Money left in your operating account gets spent, however disciplined you intend to be. A high-yield account will pay you a little for holding money you were always going to hand over.

Then pay quarterly. The set-aside account is a holding pen between being paid and sending the IRS its share four times a year — not somewhere to accumulate a whole year’s bill.

Check your own number

The bands above are a starting point. Your real figure depends on filing status, other income, and whether you qualify for the QBI deduction. The calculator below works all of it out and gives you a percentage specific to your situation.

One detail worth knowing about how it does that: because business income stacks on top of other income, it computes your set-aside rate incrementally — what the business actually adds to your tax bill, rather than dividing your household’s total tax by your freelance profit. For anyone with a day job, those two numbers are wildly different and only one of them is any use.

The honest caveat

Everything here is federal, for 2026, and assumes a sole proprietor with no employees taking the standard deduction. It ignores credits, retirement contributions, health insurance deductions, and every state.

All of those except state tax push your real bill down. So treat these as a sensible ceiling: set aside this much and you will not be caught short.