Is setting aside 30% enough for freelance taxes?

For many freelancers, 25–30% of net profit is a reasonable cushion that covers self-employment tax plus federal and state income tax. But it can be too low if you're in a high tax bracket or a high-income-tax state, and more than you need if you're in a low bracket in a no-income-tax state. Your real number depends on your profit, filing status, deductions, and state, so run it through a calculator rather than relying on a flat rule.

Do I set aside taxes on gross income or net profit?

Set aside based on net profit — your income after deductible business expenses — not gross revenue. Both self-employment tax and income tax are calculated on your net self-employment earnings, so saving a percentage of gross would set aside far more than you owe.

What if I also have a W-2 job?

Your freelance profit stacks on top of your salary and is taxed at your higher marginal rate, but your W-2 withholding already covers the salary. You only need to set aside the additional income tax plus self-employment tax on the freelance portion. You can also raise your W-2 withholding to cover it instead of making quarterly payments.

When do I actually have to pay the taxes I set aside?

If you expect to owe at least $1,000 for the year, the IRS wants quarterly estimated payments, generally due April 15, June 15, September 15, and January 15 of the following year. You send the money to the IRS (and your state) on those dates and settle any difference when you file your annual return.

What happens if I don't set aside enough?

You'll owe the balance when you file, and you may owe an IRS underpayment penalty for not paying enough during the year. You can avoid the penalty using the safe harbor: pay at least 100% of last year's total tax (110% if your prior-year AGI was over $150,000) across the four quarters.

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

The short answer most people give is "about 30%." It's a fine starting point — and it's wrong for a lot of freelancers. Here's where the number actually comes from, why it swings from roughly 20% to over 40%, and how to find your figure in a couple of minutes.

Last reviewed: June 2026 · Figures shown for the 2026 tax year

The quick answer

For many self-employed people, setting aside 25–30% of your net profit covers federal taxes with a small cushion. Save it from every payment, keep it in a separate account, and you won't be scrambling in April.

But "net profit" and "30%" are doing a lot of work in that sentence. The right percentage depends on four things: how much you earn, your filing status, the deductions you qualify for, and — often the biggest swing — which state you live in. A freelancer netting $40,000 in Texas and one netting $150,000 in California are not setting aside the same share, and a flat rule will leave one over-saving and the other short.

Rule of thumb

Save 25–30% of net profit if you live in a no- or low-income-tax state, and 30–40% if you're in a high-income-tax state or a higher federal bracket. Treat it as a floor to refine, not a final answer.

Why there's no single number: three taxes stacked together

As a freelancer you're effectively paying three taxes on your business income. Understanding them is the whole game, because each one behaves differently.

1. Self-employment tax — the 15.3% an employer normally splits with you

This is the part that surprises new freelancers. When you're a W-2 employee, you pay 7.65% toward Social Security and Medicare and your employer quietly pays the matching 7.65%. When you work for yourself, you pay both halves — 15.3% total. It applies to 92.35% of your net self-employment earnings (12.4% for Social Security up to the annual wage base of $184,500 in 2026, plus 2.9% for Medicare with no cap). The good news: you deduct half of it before figuring your income tax. This tax is flat — it doesn't care about your bracket — so it's the predictable floor under your set-aside.

2. Federal income tax — on top, at your marginal rate

Your business profit also faces ordinary federal income tax, but only after subtractions. Everyone gets the standard deduction ($16,100 single / $32,200 married filing jointly for 2026), and most freelancers also get the Qualified Business Income (QBI) deduction — up to 20% of business profit knocked off before tax. Whatever's left is taxed through the brackets, so your freelance income is taxed at your marginal rate (the rate on your last dollar), not a flat percentage.

3. State (and sometimes local) income tax

This is the wildcard. Nine states — including Texas, Florida, Washington, and Tennessee — have no state income tax at all. Others run from a couple of percent to north of 10% at the top. A few cities add their own income tax on top. Your state is often the single biggest reason your set-aside differs from your neighbor's.

A worked example

Say you're single, you net $60,000 from freelancing in 2026, you take the standard deduction and the QBI deduction, and you live in a state with no income tax. Here's roughly how it breaks down:

$60,000 net profit · single · no state income tax

Self-employment tax (15.3% × 92.35%): ≈ $8,478
Federal income tax (after standard + QBI deductions): ≈ $3,500
State income tax: $0

≈ $12,000 total — about 20% of profit

So in a no-tax state, this freelancer could set aside around 20–22% and be fine. Now move them to a state with a 6% income tax and the total climbs by several thousand dollars, pushing the set-aside toward 28–30%. Bump the income to six figures and a higher marginal bracket pushes it higher still. Same person, same effort — the right number moved by 10+ points based on income and geography. That's exactly why a calculator beats a rule of thumb.

What lowers the number

Before you panic at the top of that range, know that several things work in your favor — and most freelancers under-use them:

Business expenses. Every legitimate deductible expense lowers net profit, which lowers all three taxes at once. Software, a home office, mileage, and health-insurance premiums are common ones freelancers miss.
The half-of-SE-tax deduction. You automatically deduct half your self-employment tax when figuring income tax — no action needed.
The QBI deduction. Up to 20% of qualified business income comes off before income tax for most freelancers under the income thresholds.
Retirement contributions. A SEP-IRA or solo 401(k) can shelter a large slice of profit from income tax while building your own retirement — something no employer is doing for you now.

These reduce income tax, but note one thing: most of them do not reduce self-employment tax (retirement contributions and the QBI deduction don't lower it). That's why the 15.3% is such a dependable floor for your set-aside.

A simple system to actually save it

Open a separate "taxes" account. A free savings account works. The money you set aside isn't yours — treat it like it already belongs to the IRS.
Move your percentage off the top of every payment. The moment a client pays you, transfer your set-aside rate (say 25–30%) into that account. Doing it per-payment beats trying to find a lump sum each quarter.
Pay quarterly. If you expect to owe $1,000 or more for the year, the IRS wants estimated payments four times a year, not one check in April. Pay your state the same way if it has an income tax.
Use the safe harbor when income is unpredictable. If you can't forecast your year, pay 100% of last year's total tax (110% if your prior-year AGI topped $150,000), split into four. Hit that and you owe no federal underpayment penalty no matter how much you end up making.

Find your real set-aside number

Stop guessing with a flat percentage. Enter your income, state, and filing status and our free Quarterly Tax Estimator shows exactly what to set aside — federal, state, and self-employment tax — broken down by quarter, with real IRS due dates. Nothing leaves your browser.

Estimate what to set aside →

Frequently asked questions

Is setting aside 30% enough?: For many freelancers, 25–30% of net profit is a reasonable cushion. It can be too low in a high bracket or high-tax state, and more than you need in a low bracket in a no-income-tax state. Run your own numbers rather than relying on the flat rule.
Do I set aside on gross income or net profit?: Net profit — your income after deductible business expenses. Both self-employment tax and income tax are figured on net earnings, so saving a percentage of gross would set aside far more than you owe.
What if I also have a W-2 job?: Your freelance profit stacks on top of your salary at your higher marginal rate, but your paycheck withholding already covers the salary. You only need to set aside the extra income tax plus self-employment tax on the freelance portion — or raise your W-2 withholding to cover it.
When do I actually pay it?: If you expect to owe $1,000 or more, estimated payments are generally due April 15, June 15, September 15, and January 15 of the next year. You settle any difference when you file your annual return.
What happens if I don't set aside enough?: You'll owe the balance at filing and may owe an underpayment penalty. Avoid it with the safe harbor: pay at least 100% of last year's tax (110% if prior-year AGI was over $150,000) across the four quarters.