Freelance taxes: what to set aside from every invoice

The answer most people came for: set aside somewhere between 18% and 40% of every invoice, depending on profit and state, and if you need one number before running yours, the folk 30% is a sane middle. The freelance tax problem is not that the taxes are high (they are what they are); it is that nobody withholds them for you. An employee’s pain is distributed across 26 paychecks. Yours arrives as a bill, four times a year, sized by math most people never ran. Let’s run it.

The two taxes stacked on your profit

	Self-employment tax	Federal income tax
Rate	15.3%: 12.4% Social Security + 2.9% Medicare	Progressive brackets
Applied to	92.35% of net profit	Profit minus the standard deduction ($16,100 single for 2026) and minus half your SE tax
Cap	Social Security part stops at the wage base: $176,100 in 2025, $184,500 in 2026; Medicare never caps	None
Starts	At dollar one: no deduction against it	Only after the deduction

SE tax is the one that shocks first-year freelancers, because it starts at dollar one; the SE tax calculator itemizes it. Income tax is progressive, so your effective rate lands far below your bracket. State tax stacks on top where it exists. Checked 2026-08-22 against the IRS self-employment tax page.

What that means per invoice

The useful form of all this is one number: the percent of every payment that is not yours. The set-aside calculator computes it from your expected profit and state; typical outputs run from about 18% at modest profit in a no-tax state to 40%+ at high profit in California or New York.

The system that works: a separate savings account, a transfer the day each invoice is paid, at your computed percent. Not a spreadsheet intention. A transfer.

Quarterlies, and the trick that makes penalties impossible

The IRS wants its money as you earn: April 15, June 15, September 15, January 15. Miss the pace and you owe an underpayment penalty, which is really interest on the shortfall (7% for most of 2026, 6% in the second quarter, compounding daily). Annoying, not fatal.

Here is the part too few freelancers use: safe harbor. Pay 100% of last year’s total tax (110% if you made over $150k) in four equal quarterly payments, and you cannot be penalized, no matter how much you earn this year. Great income year? The extra tax is due in April, but penalty-free, and the cash worked for you all year. The quarterly calculator computes both your estimated bill and your safe-harbor payment.

Boring consistency, and that is the whole skill

Compute your percent, automate the transfer, pay safe harbor if last year is a guide, and stop treating April as a surprise. Freelance taxes reward exactly one skill: boring consistency.