How much should US freelancers save for taxes?

The single most useful financial habit a freelancer can build is moving money to a separate “tax savings” account every time they get paid — before the money feels like theirs to spend. The question is: how much?

The fast answer

For most US freelancers earning under $200K net, 25–30% of net self-employment income is the right starting savings rate. Round up rather than down. Worst case you over-save and have a cushion in April.

What that percentage is buying you

Three separate tax obligations stack on every dollar of freelance profit:

• Self-employment tax (Social Security + Medicare): effectively about 13% of net SE earnings after the half-deduction.
• Federal income tax: a marginal rate between 10% and 37% applied to your taxable income (after the standard deduction, the SE tax half-deduction, and any QBI deduction).
• State income tax: 0% in WA / TX / FL / NV / SD / TN / WY / AK, up to ~13% in CA. Most states are 4–7%.

Refining the number for your income

Net profit up to ~$50K

Federal bracket: 10–12%. After standard deduction and SE-tax half-deduction, effective federal rate is often single digits.

• SE tax: ~13%
• Federal: ~5–10%
• State: ~0–6%
• Save 22–27%

Net profit $50K–$100K

Federal bracket: 22%. The marginal hit per extra dollar is steeper.

• SE tax: ~13%
• Federal: ~12–17% effective
• State: ~0–7%
• Save 27–32%

Net profit $100K–$200K

Federal bracket: 24%. Social Security portion of SE tax may start to cap out for the higher earners in this range.

• SE tax: ~12–13%
• Federal: ~17–21% effective
• State: ~0–9%
• Save 30–35%

Net profit above $200K

Federal bracket 32%+. Additional Medicare surtax kicks in. Social Security wage base caps the SE-tax bite on income above $168,600. S-corp election usually starts making sense here.

• SE tax: ~5–10% blended (capped Social Security)
• Federal: ~22–28% effective
• State: ~0–13%
• Save 32–40%, talk to a CPA

The mechanical workflow

1. Open a separate “tax savings” account

A high-yield savings account at a different bank from your operating account. The friction of transferring it back is the point — you don’t want to dip into it casually.

2. Sweep on every deposit

The moment a client payment lands, transfer your tax percentage out. Calculate it on the deposit amount (gross), or — better — calculate it on the net after that month’s expenses if you reconcile monthly.

3. Pay quarterly from the tax account

Each quarterly estimated tax payment comes out of the tax-savings account. By April 15, the account ideally has just enough left to cover any shortfall on the final return.

What softens the bill (so you might over-save)

• QBI (Qualified Business Income) deduction — most freelancers below the income threshold ($191,950 single / $383,900 joint in 2026) get to deduct an extra 20% of qualified business income off taxable income.
• SEP-IRA / Solo 401(k) contributions directly reduce taxable income.
• HSA contributions if you have a high-deductible health plan.
• Health insurance premium deduction — full above-the-line deduction for self-employed coverage.

The compounding benefit

A separate tax-savings account in a 4–5% APY high-yield account earns small but meaningful interest while it sits. On $40K of average annual tax savings, that’s ~$1,000 of free money per year. Better in your account than someone else’s.