Freelancer Tax Set-Aside Calculator

The rule freelancers learn too late

When you're an employee, taxes vanish from your paycheck before you see it. When you freelance, the full invoice amount lands in your account — but 25–35% of it isn't yours. Spending it is the classic first-year mistake, and it compounds with penalties and interest.

The math is simple: set aside income tax (your bracket) plus self-employment tax. In the US, self-employment tax is 15.3% on 92.35% of net earnings (Social Security + Medicare); a typical safe set-aside is 25–30% of every payment. Outside the US, substitute your social-contribution rate.

Which bracket are you in? 2026 federal brackets (single filer)

Brackets apply to taxable income — gross minus the $16,100 standard deduction for single filers in 2026 — not to every dollar you earn. Only the dollars inside each band are taxed at that band's rate:

Thresholds per IRS Revenue Procedure 2025-32 (see the IRS 2026 inflation adjustments). Most freelancers live in the 12% and 22% bands: a $68,000 net profit minus the $16,100 deduction leaves $51,900 taxable — the first $12,400 at 10%, the next $38,000 at 12%, and only the last $1,500 at 22%.

Employee share vs self-employed share

The second layer has no brackets — just two different splits of the same taxes:

An additional 0.9% Medicare tax applies above $200,000 single ($250,000 joint). Enter the combined figure that matches your situation — 15.3% for US freelancers — in the calculator above.

Make it automatic

The result only helps if the money actually moves. On payment day, transfer the set-aside percentage to a separate savings account before you touch anything else. Many freelancers open a second account purely for taxes and treat it as untouchable.

Quarterly estimated taxes

In the US, freelancers generally must pay estimated taxes quarterly (April, June, September, January) if they expect to owe $1,000+. Set-aside discipline makes these four deadlines painless instead of terrifying.

How this calculator works

Enter the payment amount and three percentage inputs — your marginal income-tax rate, your self-employment or social-tax rate, and any extra set-aside for retirement or a buffer — and the calculator returns the dollar amount to move to your tax account, the combined percentage, and what you keep. Each layer is computed on the payment separately and added up.

Formula: Set-aside = payment × income-tax rate + payment × 92.35% × self-employment rate + payment × other rate.

One detail worth knowing: the 92.35% factor mirrors the US rule that only 92.35% of net earnings are subject to self-employment tax — so a 15.3% SE input contributes about 14.13% of the payment, not a full 15.3%. The percentage shown beside the result is the straight sum of your three inputs, while the dollar figure reflects the 92.35% adjustment, so the effective percentage runs slightly below the displayed one. Always move the dollar figure, not the headline percentage.

Worked example: a $4,200 invoice

A designer in the 22% federal bracket receives a $4,200 payment, applies the 15.3% self-employment rate, and adds a 2% retirement buffer:

1. Income-tax layer: $4,200 × 22% = $924.00
2. Self-employment layer: $4,200 × 92.35% × 15.3% = $593.44
3. Buffer layer: $4,200 × 2% = $84.00
4. Total set-aside: $924.00 + $593.44 + $84.00 = $1,601.44 — you keep $2,598.56

The displayed combined rate is 39.3%, but the effective cut is about 38.1% because of the 92.35% factor — a small gap per invoice that compounds across a full year, which is why the calculator shows you both numbers.

What the set-aside looks like at three income brackets

Same $4,200 payment and 15.3% self-employment rate, no buffer — only the marginal income-tax rate changes:

Freelance dollars are taxed at your highest marginal rate, not your average one — a second earner in the household or a strong W-2 half-year can push every invoice into a higher row of this table.

What this leaves out

Four limits to handle deliberately. State taxes vary: the calculator has no separate state field, so fold your state income-tax rate into the income-tax input — in high-tax states that adds several points on its own. S-corporation filers differ: S-corp owners pay self-employment tax only on their reasonable salary, not on distributions, so this calculator overstates the set-aside for S-corps — run distributions through your accountant's figure instead. Deductions shrink the base: compute the percentage on net profit after business expenses, not on gross invoices, since every deductible dollar lowers both the income-tax and the self-employment layer. Timing still matters: money set aside is only half the job — in the US it must actually be paid in quarterly estimates, because underpayment triggers penalties and interest even if you settle up in April.

Sources: the 15.3% self-employment rate and the 92.35% taxable base come from the IRS self-employment tax rules; quarterly deadlines and the $1,000 threshold are in the IRS estimated taxes guidance.

The bracket, payroll-tax, and standard-deduction figures on this page track 2026 IRS limits and were recomputed by hand. How we check every page.

Related calculators

The set-aside is one part of the picture: the QBI deduction calculator estimates the 20% pass-through deduction that lowers the bill, the mixed W2/1099 tax calculator handles income from an employer and your own clients in the same year, and the freelance invoice generator prints the set-aside line on every invoice so the money is separated at the point of payment. The percentages behind the 25–30% default are explained in the tax set-aside guide, and every write-off that shrinks the base is listed in the freelance tax deductions guide.