How much should freelancers set aside for taxes?

By Kitson · September 2026 · 6 minute read · US rules

General education about how US self-employment taxes work, not tax advice for your situation. The numbers below are an invented example.

When you work for an employer, tax comes out of every paycheck. When you freelance, sell on Fiverr or run a Payhip shop, nobody withholds anything. The money lands in PayPal in full, and the tax bill arrives later. Setting money aside as you earn is how you avoid a painful surprise.

The short answer

A common starting point is to set aside 25–30% of your profit (income minus business expenses). It's a rule of thumb, not a rule. Your real number depends on your total income, deductions and state, and the worked example below shows where a figure like that comes from.

What you're saving for

1. Self-employment tax

This is Social Security and Medicare for people who work for themselves. It's 15.3% of 92.35% of your net self-employment earnings, once those earnings reach $400 in a year. Employees split this with their employer; freelancers pay both halves. You can deduct half of it when working out your income tax. Two limits apply at higher incomes: the 12.4% Social Security part stops at the yearly wage base ($184,500 for 2026), and a 0.9% Additional Medicare Tax applies above $200,000 ($250,000 married filing jointly, $125,000 married filing separately).

2. Income tax

Your freelance profit is added to any other income and taxed at your normal federal rate, plus state income tax if your state has one.

A worked example

Here's an invented example: a freelancer with $1,000 of profit, in the 12% federal bracket, living in a state with no income tax.

That's about 25% of the profit. In a higher bracket or a state with income tax, it climbs toward 30% or more. This simplified example leaves out the standard deduction and credits, which can lower the bill.

Quarterly estimated payments

If you expect to owe $1,000 or more when you file, the IRS expects you to pay during the year through estimated tax payments. The usual due dates are:

When a date falls on a weekend or holiday, it moves to the next business day. To avoid an underpayment penalty, you generally need to pay at least 90% of this year's tax, or 100% of last year's (110% of last year's if last year's adjusted gross income was over $150,000, or $75,000 if married filing separately).

A simple set-aside habit

Here's one common routine people use; adjust it to your situation or ask a tax professional:

1. A separate savings account used only for taxes.
2. A chosen set-aside percentage (the example above works out near 25%) moved there the same day each payment lands, so that money never feels spendable.
3. Receipts kept for business expenses, since they lower profit and, with it, the tax.
4. Before each due date, the profit for that payment period (3, 2, 3 and 4 months long, as in the table above) is added up and the estimate is paid from the tax account.
5. At tax time, anything left over in the account stays with the freelancer.

You may get a Form 1099-K from a payment app or marketplace (for 2026, generally only above $20,000 and more than 200 transactions), or a Form 1099-NEC from a client who paid you $2,000 or more. Many small sellers get neither. Either way, report all of your income.

This guide explains general US rules as of 2026 and isn't tax or legal advice. Check the IRS Self-Employed Tax Center or ask a tax professional about your situation.