How Much Should a Freelancer Set Aside for Taxes? (2026 Self-Employment Tax Guide)
How self-employment tax is calculated, when quarterly estimated payments are due, and how to avoid the underpayment penalty, sourced from the IRS.
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Not tax advice. This covers federal self-employment tax and estimated payments for 2026. State income tax is extra. Talk to a tax professional about your own situation.
Quick answer: As a freelancer you owe two federal taxes on your profit: self-employment tax (15.3% on most of it) and regular income tax. There's no single right percentage to set aside, because income tax depends on your bracket, deductions, and state. The safest way to pick a number is to use the IRS's own worksheet in Form 1040-ES, then save that share of every payment you receive.
Self-employment tax: the part that surprises people
From the IRS self-employment tax page:
- The rate is 15.3%: 12.4% for Social Security plus 2.9% for Medicare.
- You owe it if your net earnings from self-employment are $400 or more.
The 2026 Form 1040-ES worksheet shows how it's actually figured:
- Take your expected net profit (income minus business expenses).
- Multiply by 92.35%.
- The 2.9% Medicare part applies to all of that.
- The 12.4% Social Security part applies only up to $184,500 for 2026 (minus any W-2 wages that already had Social Security tax taken out).
- You can deduct half of your self-employment tax when figuring your income tax.
Example: $50,000 net profit, no other job
| Step | Amount |
|---|---|
| Net profit | $50,000.00 |
| × 92.35% | $46,175.00 |
| Medicare part (× 2.9%) | $1,339.08 |
| Social Security part (× 12.4%) | $5,725.70 |
| Self-employment tax | $7,064.78 |
| Half you can deduct for income tax | $3,532.39 |
That $7,064.78 is on top of regular income tax.
When to pay: quarterly estimated tax
Freelancers usually pay through quarterly estimated payments. You generally need to make them if you expect to owe $1,000 or more when you file (IRS Publication 334). For calendar-year 2026 the due dates are (IRS estimated tax FAQ):
| Income earned | Payment due |
|---|---|
| Jan 1 to Mar 31 | April 15, 2026 |
| Apr 1 to May 31 | June 15, 2026 |
| Jun 1 to Aug 31 | September 15, 2026 |
| Sep 1 to Dec 31 | January 15, 2027 |
How to avoid the underpayment penalty
Per the 2026 Form 1040-ES, you generally avoid the penalty if your withholding plus estimated payments cover the smaller of:
- 90% of your 2026 tax, or
- 100% of your 2025 tax (110% if your 2025 adjusted gross income was over $150,000, or $75,000 if married filing separately).
Paying a quarter of last year's total tax each quarter is the simplest way to hit the second option, since it's a number you already know.
Make setting money aside automatic
Once you've worked out your percentage from the worksheet:
- Open a separate savings account just for taxes.
- Every time a client pays you, move that percentage over the same day.
- Pay each quarter from that account.
Our freelancer income and tax set-aside tracker logs each payment and expense, works out your net income (with a business-use percentage for mixed costs like a phone), applies the set-aside rate you choose, groups everything by quarter based on when payments arrived, and shows per-client totals and overdue invoices. It doesn't contain tax rates or calculate what you owe; use the IRS worksheet for that. For invoicing and expense tracking that feeds your profit number, accounting software helps: Wave, FreshBooks, or QuickBooks Online.
Keep your records for at least 3 years after filing; our monthly bookkeeping routine covers what to keep and for how long.
Sources: IRS. Last checked Oct 11, 2026.