Freelance Tax Set-Aside Calculator
Calculate exactly how much to set aside from every freelance invoice for self-employment tax, federal/state income taxes, and quarterly IRS estimates.
Annual Gross Earnings & Business Deductions
Recommended Tax Reserve & Payment Schedule
💡 The Freelancer Golden Tax Rule
Whenever client payments hit your checking account, immediately schedule an automated transfer of 25.0% into a separate high-yield tax savings account. When quarterly estimated tax deadlines arrive, your cash will be fully reserved without stress.
About this tool
How to use it
- Select your tax jurisdiction (United States, United Kingdom, Canada, or Australia).
- Enter your projected annual gross freelance revenue and estimated tax-deductible business expenses.
- Enter your state or provincial income tax rate (or 0% if living in a state with no income tax like Texas or Florida).
- Specify your typical client invoice amount to view your exact dollar set-aside requirement per deposit.
- Review your recommended set-aside percentage, total annual tax projection, and quarterly estimated IRS/HMRC payment amounts.
Why it matters
Unlike traditional W-2 employees whose taxes are automatically withheld from every paycheck, 1099 independent contractors and freelancers are fully responsible for both halves of FICA (15.3% Self-Employment tax) plus regular income tax. Setting aside 25% to 30% of every invoice into a dedicated sub-account prevents brutal surprise tax bills and late payment penalties.
When to use it
Use this calculator at the start of every tax year, whenever raising client rates, receiving client deposits, or filing quarterly estimated taxes (April 15, June 15, September 15, January 15 in the US).
Good to know
Calculations simulate progressive federal income tax brackets, standard deductions, state income tax, and self-employment tax (including the 50% above-the-line deduction for the employer-equivalent portion of SE tax under IRC § 164(f)).
Common questions
What percentage should a freelancer set aside for taxes?
Most freelancers should set aside between 25% and 30% of every payment they receive. If you earn over $100,000 or live in a high-tax state like California or New York, increasing your set-aside to 30%–35% provides a safe cushion.
What is the self-employment tax rate?
In the United States, the self-employment tax rate is 15.3%, consisting of 12.4% for Social Security (on earnings up to the annual wage base cap) and 2.9% for Medicare (with no income limit). You are permitted to deduct half of your self-employment tax when calculating your Adjusted Gross Income (AGI).
When are quarterly estimated taxes due?
For US taxpayers, estimated quarterly payments are generally due on: Q1: April 15; Q2: June 15; Q3: September 15; and Q4: January 15 of the following calendar year.
What happens if I don't pay quarterly estimated taxes?
If you owe more than $1,000 in federal taxes at year-end and did not pay at least 90% of your current year's tax (or 100% of your prior year's tax liability), the IRS assesses an underpayment penalty plus interest on the unpaid quarterly balances.
What business expenses can I deduct to lower my freelance taxes?
Common deductible business expenses include software subscriptions (Adobe, hosting, Google Workspace), home office deductions, hardware equipment, professional coaching, health insurance premiums, internet/phone bills, and mileage for client travel.