How Much Should Freelancers Set Aside for Taxes?

The standard advice: set aside 25-30% of your net profit (income minus deductions). That covers a typical mix of federal income tax, the full 15.3% SE tax, and an average-state income tax.

It works for most freelancers earning $40K-$120K in net profit. But it's a blunt instrument — it can be wildly too much or too little depending on your specific situation.

State income tax ranges from 0% (TX, FL, WA, NV, TN, NH, AK, SD, WY) up to 13.3% (CA top bracket). That's a 13-point swing on the same income.

• No-income-tax states (TX, FL, WA, etc.): start at 22-25%
• Average states (most): 25-30%
• High-tax states (CA, NY, OR, NJ, MN): 30-35%

For a freelancer with $80,000 in net profit, single, in a state with no income tax:

Net profit:                    $80,000
SE tax (15.3% × 92.35%):       $11,304
Half-SE deduction:             -$5,652
QBI deduction (20%):           -$14,870
Federal taxable income:        ~$59,478
Federal income tax (single):    ~$8,500
State tax (TX):                       $0
Total tax:                     ~$19,800
% of net profit:                 ~24.8%

Same person in California: add roughly $5,000 in state tax → ~31% total. Same person in NYC: add another ~3% local tax on top.

Rough percentages for a single freelancer in an average state:

• $50,000 net profit → set aside ~22-25%
• $75,000 net profit → set aside ~26-29%
• $100,000 net profit → set aside ~28-32%
• $150,000 net profit → set aside ~32-36%
• $200,000+ net profit → set aside ~35-40% (additional Medicare surtax kicks in)

If you'd rather not guess: pay 100% of last year's total tax in equal quarterly installments (110% if your AGI was over $150K). Do that and the IRS can't charge you an underpayment penalty, no matter how much you end up owing at year-end.

This is the easiest mental model: take last year's total tax, divide by 4, send that to the IRS each quarter. Then you know any extra you owe at year-end is genuinely "new" money, not a penalty trap.

TaxClutch calculates your exact running tax liability based on your income, deductions, state, filing status, and dependents — not a rule of thumb. Every time you log an invoice or expense, the dashboard updates how much to transfer into your tax savings account.