How Much Should I Set Aside for Taxes Each Month?

Quarterly taxes are when you PAY the IRS. But the right time to SAVE for taxes is monthly — or even per-payment. Most freelancers who blow up at tax time do so because they spent the money expecting 'I'll figure it out before quarterly.' By then it's gone.

When a client payment hits your account, transfer 28% of it to a separate tax savings account immediately — before doing anything else with the money. 28% covers federal + SE tax for most middle-income freelancers in mid-tax states. Adjust up or down based on income and state.

Client payment: $5,000
Transfer to tax account: $5,000 × 28% = $1,400
Available to spend: $3,600

• No-tax states (TX, FL, NV, WA, etc.): save 25%
• Mid-tax states (most): save 28-30%
• High-tax states (CA, NY, NJ, MA): save 33-36%
• Very high earners ($150k+): add 3-5% to whatever your state baseline is

The hardest part is the first three months. Once it becomes automatic, the tax fund is invisible — you don't miss the money because it never registered as available. Some banks let you set up automatic transfers when deposits hit. Even better: use a separate bank entirely so you can't accidentally see it on your main app.

Name the savings account 'IRS Money — Do Not Touch.' Sounds silly, works.

If you have a $20k month, transfer $5,600. Don't talk yourself into 'I had a big month, I'll skip the transfer.' Inversely, slow months are when you're tempted to dip into the tax account — don't. The tax money is already spent (just not paid yet); raiding it just delays the pain.

28% is a rule of thumb. TaxClutch calculates your exact percentage based on your actual deductions, state, filing status, and prior W-2 withholding. Some freelancers find their real number is 22% (with maxed deductions) or 35% (high earner in CA). Knowing your real number means saving exactly what's needed — not over- or under-saving.