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Freelance Tax Set-Aside Calculator

Enter your income, expenses and tax rate to see how much to reserve for taxes each year and month.

How it is calculated

All figures are per year. The tool subtracts your expenses from your income to get the taxable net, net = income − expenses, never below zero. It then reserves set aside = net × rate ÷ 100, where the rate is the single combined percentage you expect to pay on that net (income tax plus any self-employment contributions). From this it derives monthly = set aside ÷ 12, after tax = net − set aside and share of gross = set aside ÷ income × 100. The tool does not know your country, brackets or deductions: the rate is entirely your estimate. If expenses exceed income, every result is zero. Amounts are shown with a dollar sign. Income, expenses and rate cannot be negative.

Worked example

A freelancer earns 72000 in a year, has 9000 of business expenses and expects a combined rate of 28 percent. Net: 72000 − 9000 = 63000, shown as $63,000.00. Set aside: 63000 × 28 ÷ 100 = 17640, shown as $17,640.00. Per month: 17640 ÷ 12 = $1,470.00. What remains after tax is 63000 − 17640 = $45,360.00. As a share of the gross income, 17640 ÷ 72000 = 24.50%, which is lower than 28 because the rate applies to net, not gross.

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Common mistakes

  • Applying the rate to income instead of net. The tool applies it to income minus expenses, so the share of gross is always lower than the rate you type.
  • Entering a monthly income and expecting a monthly answer. The inputs are yearly amounts, so the monthly figure is simply the annual set-aside divided by 12.
  • Using only your income tax bracket. The rate should combine every tax you owe on freelance earnings, such as social contributions, or the set-aside will be too small.
  • Counting personal spending as business expenses. Only costs that are deductible where you live should be entered, and rules differ by country.
  • Treating the amount as a precise tax bill. It is a savings target based on your estimated rate, not a tax return calculation.

About this calculator

Unlike a W-2 employee, a freelancer's taxes aren't withheld automatically, so a common rule of thumb is to set aside a flat percentage — often cited as 25–30% in the U.S. — of net self-employment earnings (income minus deductible business expenses) to cover both income tax and self-employment tax (the 15.3% that replaces the employer/employee split of Social Security and Medicare). The exact figure depends on your tax bracket, state taxes, and deductions, but a consistent set-aside rate keeps you from being caught short at filing time.

This calculator takes your income, expenses, and effective tax rate, and translates the resulting tax liability into concrete yearly and monthly savings targets. Freelancers, gig workers, and independent contractors use it to size a separate savings account they fund with every payment, so quarterly estimated tax payments — and the year-end bill — never come as a surprise.

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Comments (1)

  • Editorial team

    The percent-of-gross line is the practical one for day-to-day saving: because your rate applies to net, the share of each payment to move aside is that percentage, 26.25% for the default figures, not the rate you typed. That holds if your costs stay roughly proportional to income. The tool does not know your country, so the rate is entirely your own estimate. How did you arrive at the rate you use?

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