How Much to Save for Taxes as a Freelancer (2026)

Most freelancers should set aside somewhere around 25% to 30% of their profit (income minus business expenses) for federal and state taxes. Treat that range as a starting point, not an answer. Your real number depends on three things: the 15.3% self-employment tax, the income tax bracket your profit lands in, and your state. And if freelancing is a side hustle on top of a salaried job, you'll often need to save more than a full-time freelancer earning the same profit, because your side income is taxed on top of your paycheck.

Last updated: November 2026

The part everyone knows, and the part they miss

Almost every freelancer has heard "save a quarter of what you make." Fewer know what the quarter is made of, and that's where the rule goes wrong.

Two details do most of the damage. First, the percentage applies to profit, not to everything that hits your account. If clients paid you $8,000 this month and you spent $1,500 on software, contractors and travel for the work, you're saving against $6,500. Second, and this is what most people don't realize, the biggest slice of the bill often isn't income tax at all. At moderate incomes, self-employment tax can be larger than federal income tax, and it applies from the first few hundred dollars of profit.

Where the money actually goes

Your freelance tax bill has three parts.

Self-employment tax. This is Social Security and Medicare for people who work for themselves. According to the IRS, the rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. It's figured on 92.35% of your net earnings, per the IRS estimated tax worksheet in Publication 505, and it kicks in once net earnings from self-employment reach $400. For 2026, the Social Security part stops once your combined wages and self-employment earnings reach $184,500. Above $200,000 for single filers ($250,000 married filing jointly), an extra 0.9% Medicare tax applies. One bit of relief: you can deduct the employer-equivalent half of self-employment tax when figuring your adjusted gross income.

Federal income tax. For 2026, the standard deduction for a single filer is $16,100. Taxable income above that is taxed in brackets: 10% up to $12,400, 12% up to $50,400, 22% up to $105,700 and 24% up to $201,775, with higher rates above that (figures from the 2026 tax rate schedules in IRS Publication 505).

State income tax. This one varies too much to generalize. Some states have none; others take a meaningful share. Check your own state's revenue department.

Two freelancers, two very different percentages

Here's how those parts add up in two simplified 2026 examples for single filers. They leave out state tax, credits and the qualified business income deduction (which can lower the income tax piece), so they show how the math behaves, not what you'll owe.

	Full-time freelancer	Side hustler
Freelance profit	$60,000	$10,000
Other income	None	$70,000 salary
Self-employment tax	about $8,478	about $1,413
Added federal income tax	about $4,511	about $2,045
Federal total as a share of freelance profit	about 22%	about 35%

Look at the left column. Self-employment tax is nearly twice the income tax. That's the piece people forget when they save "a bit for taxes" based on what a salaried friend pays.

Now the right column. The side hustler earns far less from freelancing but needs a higher percentage, because their salary has already used up the 10% and 12% brackets. Every side-hustle dollar after expenses is taxed at 22% for income tax, plus self-employment tax on top. A flat 25% would leave this person short before state tax even enters the picture.

That's the problem with the one-size rule: it's tuned for the full-time case and quietly fails people with a day job. If a flat 25% left you short last April, it's not your fault. The rule was never built for your situation.

How to turn your percentage into a habit

Pick a percentage from the math above (or, better, from last year's return once you have one) and move that slice out every time a client pays you. A separate savings account labeled "taxes" works. The point is that the money leaves your spending balance the day it arrives, before rent and groceries find it.

A few things that make this easier:

• Use profit, not deposits. If clients pay by card, the processing fee comes out before the money lands. Record the full payment and the fee separately so your profit figure is right. Our guide on how to accept credit card payments as a freelancer covers the setup side.
• Pay more often if it helps. The IRS says you can pay estimated taxes weekly, every two weeks or monthly, as long as you've paid enough by the end of the quarter.
• Side hustlers have a second option. The IRS notes that if you get a paycheck, you can ask your employer to withhold more by filing a new Form W-4, which can cover tax on side income instead of separate estimated payments.
• Re-check mid-year. If a big contract lands in July, the percentage you picked in January may be too low.

Deadlines and the safe-harbor shortcut

The IRS says you generally need to make estimated tax payments if you expect to owe $1,000 or more when you file. For tax year 2026, the four due dates are April 15, June 15 and September 15, 2026, then January 15, 2027. If you file your 2026 return by January 31, 2027 and pay the rest of what you owe, you don't need to make the January payment, according to Publication 505.

Worried you'll guess wrong? The IRS has a safe harbor. You can generally avoid the underpayment penalty if you paid at least 90% of this year's tax or 100% of last year's tax, whichever is smaller. If your 2025 adjusted gross income was over $150,000 ($75,000 married filing separately), the prior-year figure becomes 110%. For freelancers with income that swings, basing payments on last year's tax is the calmer route. A tax professional can confirm which approach fits you.

Where PennyBot helps, and where it doesn't

Every percentage above is multiplied by one number: your profit so far this year. Keeping that number current is the job PennyBot does.

You bring transactions in by CSV import, manual entry, or by asking your connected AI to record them. In the US, you can link your bank in ChatGPT (its Finances feature) or Grok, connect PennyBot by signing in, and ask it to record your transactions; PennyBot never sees your bank login. Transactions get categorized, and the income, spending and monthly summary reports show where the year stands. The Deductible-Category Report groups year-to-date expenses by category, includes business mileage at the IRS rate for each trip's date, and adds a 1099 vendor summary. You can also ask "how much have I made after expenses this year?" in PennyBot's chat or in the AI you already use. More on how that works day to day is in our post on the AI bookkeeping app for freelancers.

What it won't do: PennyBot doesn't calculate your tax bill or tell you what to pay. Its AI gives general tax education and suggests a CPA or Enrolled Agent for anything specific to you. Whether an expense is deductible depends on your situation.

On the Professional plan, cash flow forecasting projects month by month from the recurring income and expense patterns in your transactions, which helps you see whether a payment date falls in a thin month. If you're also building a wider budget around irregular income, see our guide to the best budgeting app for freelancers.

Essentials is $5 a month and Professional is $15 a month; compare them on the pricing page.

Frequently asked questions

What percentage of income should a freelancer save for taxes?

A common starting point is 25% to 30% of profit, meaning income minus business expenses. Your own number depends on the 15.3% self-employment tax, your federal income tax bracket and your state's income tax. Once you've filed a year as a freelancer, last year's return is a better guide than any rule of thumb. A tax professional can help you set it.

Do side hustlers need to save more than full-time freelancers?

Often, yes. If you already earn a salary, your side profit is taxed on top of it, so it usually lands in a higher income tax bracket. Self-employment tax still applies too. In a simplified 2026 example, $10,000 of side profit on top of a $70,000 salary came to about 35% in federal tax alone, before any state tax.

Should I save a percentage of revenue or profit?

Profit. Income tax and self-employment tax are both figured on what's left after business expenses, so saving against every deposit overstates what you need. That said, if your expenses aren't tracked yet, saving against revenue is the safer temporary habit until your records catch up. Once they do, switch to profit.

When is the next estimated tax payment due?

For tax year 2026, the IRS due dates are April 15, June 15 and September 15, 2026, and January 15, 2027. Per IRS Publication 505, you can skip the January payment if you file your 2026 return by January 31, 2027 and pay the remaining balance. When a due date falls on a weekend or holiday, the next business day counts.