You just got paid $2,000 for a freelance project. Congratulations. Now — how much of that should you immediately move to a savings account for taxes?
The common advice is "set aside 25–30%." That's a reasonable starting point, but it's also a rough estimate that can leave some freelancers over-saving and others dangerously under-saving. Your actual number depends on how much you earn, where you live, and what you can deduct.
Here's how to figure out your real number.
Why you can't just use the "25–30% rule" blindly
The 25–30% rule tries to cover both self-employment tax and federal income tax in a single percentage. The problem: those two taxes behave very differently at different income levels.
Self-employment tax is essentially flat — about 14.1% of your net income up to the Social Security wage base, regardless of whether you earn $20,000 or $120,000. Federal income tax, however, is progressive — the rate increases as your income rises.
A freelancer earning $25,000 net might only need to set aside 20%. A freelancer earning $90,000 net might need 35% or more. The same percentage doesn't work for both situations.
The two taxes you're covering
When you set aside money for taxes as a freelancer, you're covering two things: self-employment tax and federal income tax.
Self-employment tax is 15.3% applied to 92.35% of your net income — which works out to an effective rate of about 14.1%. This is non-negotiable regardless of income level (up to the $176,100 Social Security wage base in 2025). There's no deduction or credit that eliminates it outright, though you do get to deduct half of it from your income tax calculation.
Federal income tax is calculated on your adjusted gross income after the SE deduction, standard deduction, and any other deductions. The 2025 federal tax brackets for single filers are:
| Taxable income | Federal rate |
|---|---|
| $0 – $11,925 | 10% |
| $11,926 – $48,475 | 12% |
| $48,476 – $103,350 | 22% |
| $103,351 – $197,300 | 24% |
| $197,301 – $250,525 | 32% |
| Over $250,525 | 35–37% |
A realistic set-aside percentage by income level
The table below shows recommended federal tax set-aside percentages for single freelancers in 2025, accounting for both SE tax and estimated income tax after the standard deduction ($15,000 in 2025) and the SE tax deduction.
| Net self-employment income | Recommended set-aside | What it covers |
|---|---|---|
| Under $20,000 | 15–18% | SE tax + minimal income tax |
| $20,000 – $40,000 | 20–23% | SE tax + 10–12% income tax bracket |
| $40,000 – $70,000 | 25–28% | SE tax + 12–22% income tax bracket |
| $70,000 – $100,000 | 28–32% | SE tax + 22% income tax bracket |
| Over $100,000 | 32–35%+ | SE tax + 22–24% income tax bracket |
Remember: these are federal-only. Add your state income tax rate on top. If you're in a state with no income tax (Texas, Florida, Nevada, etc.), these numbers are your total set-aside target.
The mechanical approach: the safest method
If you don't want to estimate, here's a mechanical system that works for any income level:
- Every time you receive a payment, immediately transfer 30% to a separate tax savings account.
- At the end of each quarter, run our Quarterly Tax Estimator to calculate your actual payment.
- Pay the actual amount to the IRS. Leave any excess in the savings account as a buffer.
- At year end, the remaining balance either covers your annual filing or becomes a head start on next year.
The beauty of this system: 30% is intentionally slightly high for most income levels. The excess accumulates as a buffer, and over time it smooths out the irregular nature of freelance income.
Deductions reduce how much you need to set aside
Every dollar of legitimate business expense you deduct reduces your net self-employment income — which reduces both your SE tax and your income tax. This is why tracking deductions matters so much: it directly changes how much of each payment you need to hold back.
Common deductions that meaningfully reduce your set-aside target: mileage (huge for drivers), home office, equipment, software subscriptions, health insurance premiums, and retirement contributions. If you're actively deducting these, your real set-aside percentage may be several points lower than the table above suggests.
Use our Mileage Deduction Calculator to see how much your driving saves you in actual taxes.
The psychological trick that makes this work
The biggest reason freelancers end up with a painful tax bill isn't that they don't know they should save — it's that they don't make saving automatic and separate.
The moment your payment hits your main checking account, it mentally becomes "your money." Open a separate high-yield savings account, label it "Tax — do not touch," and set up an automatic transfer every time you deposit a client payment. Some gig worker banking apps like Lili do this automatically — they route a percentage of every deposit into a tax bucket without you doing anything.