How much should freelancers set aside for taxes?

Updated June 2026 · ~6 min read

The short answer: most freelancers in the U.S. should set aside 25–30% of their net profit for taxes. But "it depends" — so here's how to find your real number, and how to make sure the money is actually there when the bill comes.

Why freelancers owe more tax than they expect

When you're an employee, your employer quietly withholds taxes from every paycheck and pays half of your Social Security and Medicare for you. When you're self-employed, you are both the employer and the employee — so two things bite at once:

• Self-employment (SE) tax — 15.3%. This is Social Security (12.4%) and Medicare (2.9%), and you pay both halves. It applies to roughly 92.35% of your net self-employment earnings.
• Federal income tax. On top of SE tax, your profit is also subject to ordinary income tax at your marginal bracket.
• State income tax. Anywhere from 0% (e.g., Texas, Florida) to ~13% depending on where you live.

Stack those up and you can see how 25–30% becomes the common landing zone — and why a freelancer who spent every dollar that came in can get a nasty surprise in April.

Set aside on profit, not gross income

You're taxed on your net profit — what's left after legitimate business expenses (software, equipment, a home-office portion, contractor payments, etc.). So the right move is:

• Take each payment you receive.
• Subtract the business expenses tied to your work.
• Set your tax percentage aside on what's left.

Tracking deductible expenses isn't just bookkeeping hygiene — every deductible dollar lowers the income you owe tax on.

Don't forget quarterly estimated taxes

This is the part that trips up most new freelancers. The IRS expects you to pay tax as you earn it, not in one lump at year-end. If you'll owe $1,000+ for the year, you generally need to make quarterly estimated payments. For 2026 the deadlines fall on roughly:

• April 15 (Jan–Mar earnings)
• June 15 (Apr–May)
• September 15 (Jun–Aug)
• January 15, 2027 (Sep–Dec)

Miss them and you can owe underpayment penalties even if you pay in full later. A common way to stay safe (the "safe harbor") is to pay 100% of last year's total tax — 110% if you're a higher earner — or 90% of what you'll owe this year.

Where to keep the money

Open a separate savings account for taxes and move your set-aside there the moment a client pays you. The single biggest reason freelancers come up short isn't math — it's that the money was sitting in their checking account and quietly got spent. Out of sight, out of temptation.

The real challenge: irregular income

All of this is straightforward when your income is steady. It's brutal when you make $8,000 one month and $900 the next. Big months tempt you to spend; lean months tempt you to skip the tax set-aside entirely. The fix is a system that takes its cut off the top of every payment, the day it arrives — so by the time a quarterly deadline shows up, the money is already waiting.

That's exactly the problem Even Wage was built to solve: it turns the feast-or-famine cycle into a predictable paycheck, with taxes handled in the background. For the bigger picture, see our guide on how to budget with an irregular income, or see how Even Wage works →

This article is general educational information for U.S. freelancers, not tax advice. Tax rules change and your situation is unique — confirm your numbers with a qualified CPA or tax professional before filing or making payments.