How Much Should You Set Aside for Self-Employment Taxes?
The short answer most tax pros give is 25% to 30% of your net profit. Here's why that range works, when you should save more or less, and how to get an exact number.
Quick answer: Set aside 25–30% of your net profit (income after business expenses) to cover federal income tax and self-employment tax. Higher earners, or people in states with income tax, often need closer to 35%.
Why 25–30%?
When you work for yourself, no employer withholds taxes from your pay, so you're responsible for setting aside your own. Your tax bill has two main parts:
- Self-employment tax of 15.3% (12.4% for Social Security plus 2.9% for Medicare) on your net earnings.
- Federal income tax at your marginal rate, which for most self-employed people lands in the 10%–24% brackets.
Stack those together, subtract the deductions you're entitled to (like half of your self-employment tax and the 20% qualified business income deduction), and the effective rate for a typical freelancer usually lands in the mid-20s as a percentage of profit. That's where the 25–30% guideline comes from.
Set aside based on profit, not revenue
This is the most common mistake. You owe tax on your net profit, revenue minus legitimate business expenses, not on everything that hits your bank account. If you bring in $120,000 but have $30,000 of real expenses, you're taxed on $90,000. Saving a percentage of the full $120,000 means over-saving by thousands. Track your expenses and base your set-aside on what's left.
When to save more than 30%
- You live in a state with income tax (most do). State tax is on top of the federal figure above.
- Your income is high enough to reach the 32%+ federal brackets or trigger the 0.9% additional Medicare tax.
- You have few deductions relative to your income.
When you can save a little less
- You live in a no-income-tax state (like Florida, Texas, or Washington).
- Your profit is modest and you have significant deductions or retirement contributions.
A simple system that works
Open a separate savings account labeled "taxes." Every time you get paid, move your set-aside percentage into it immediately, before the money feels spendable. When quarterly estimated taxes come due, the money is already there. Freelancers with uneven income often save a higher percentage in strong months to cushion the slow ones.
Estimate your taxes now →Enter your income and see your federal, self-employment, and state tax in seconds, free.Get your real number
A percentage rule is a starting point, not your actual bill. Your true rate depends on your income, filing status, state, and deductions. The calculator above runs the full 2026 math, self-employment tax, income tax, the QBI deduction, and your state, so you can replace the rule of thumb with a figure built on your actual situation.