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How Much Should You Set Aside for Taxes When You're Self-Employed?
The short answer: most self-employed people should set aside 25–30% of every payment. That covers 15.3% self-employment tax on profit plus federal and state income tax. Lower earners and drivers with big mileage deductions often need less; high earners in high-tax states may need more. Use the calculator for your number.
Self-employed tax set-aside calculator
What you're saving for
- Self-employment tax: 15.3% of 92.35% of your profit (12.4% Social Security up to the $184,500 wage base, plus 2.9% Medicare). About 14% of profit. See self-employment tax explained.
- Federal income tax on profit after the standard deduction, half of your self-employment tax and the 20% business income deduction.
- State income tax in most states.
A quick percentage guide
| Your situation | Set aside |
|---|---|
| Side income under ~$20,000 profit, no other job | 15–20% |
| Full-time freelancer, $40,000–$100,000 profit | 25–30% |
| Side income on top of a full-time job | 30–35% |
| Over $150,000 profit, or a high-tax state | 35%+ |
Rules of thumb, not tax advice. Your deductions change the answer; see deductions the self-employed miss.
How to make it automatic
- Open a separate savings account just for taxes.
- Every time a payment arrives, move your percentage into it before spending anything.
- Pay from that account four times a year. See quarterly estimated taxes.
- Re-check your percentage mid-year as your income changes.
For gig drivers
Drivers often need less because of the 72.5¢ mileage deduction and the tips deduction. See gig worker taxes.
FAQ
What percentage should I set aside for taxes if I'm self-employed?
Most people should set aside 25–30% of each payment. Lower earners may need 15–20%; high earners or those with another job may need 30–35% or more.
Why is self-employment tax so high?
You pay both the employee and employer shares of Social Security and Medicare, 15.3% in total on 92.35% of your profit.
Do I set aside a percentage of revenue or profit?
Saving a percentage of every payment (revenue) is simplest and leaves a cushion. Your actual tax is based on profit after expenses.
Sources: IRS: self-employment tax · IRS 2026 inflation adjustments · 2026 Social Security wage base · IRS: estimated taxes. General information for planning, not tax, legal or financial advice.