Most self-employed people should set aside 25 to 30 percent of every payment they receive for taxes. That range covers federal income tax plus the 15.3 percent self-employment tax. If you earn well into six figures or live in a high-tax state, aim closer to 35 percent.
That is the short answer. Here is why the number lands where it does, and how to make setting it aside something you never have to think about again.
Why a percentage works better than a guess
When you had a W-2 job, your employer pulled taxes out of every paycheck before the money ever reached you. You never had to plan for it. As a 1099 earner, that job is now yours. The income lands in full, and the tax bill arrives later in one lump, usually at the worst possible time.
The fix is to treat a fixed slice of every payment as money that was never yours to begin with. A client pays you 5,000 dollars. You move 1,500 of it aside. You build the rest of your life around the 3,500 that is left. Done consistently, this turns a terrifying April number into a non-event.
The two taxes you are actually saving for
Your set-aside covers two separate things.
The first is self-employment tax. This is the part that surprises almost everyone who goes independent. It is a flat 15.3 percent on your net self-employment income, split into 12.4 percent for Social Security and 2.9 percent for Medicare. When you were an employee, your employer quietly paid half of this for you. Now you pay both halves. For 2026, the Social Security portion applies to the first 184,500 dollars of net earnings. Above that, only the 2.9 percent Medicare piece keeps going.
One piece of good news: you get to deduct the employer-equivalent half of your self-employment tax on your federal return, which lowers your income tax.
The second is federal income tax, charged at your regular bracket on your profit after deductions. This is the part that moves the most from person to person, because it depends on how much you make, how you file, and how many legitimate deductions you are actually capturing.
What pushes your number up or down
The 25 to 30 percent rule is a strong default, but a few things shift it.
Your income level. More profit means a higher income tax bracket on the top slice of your earnings. Higher earners should plan closer to 35 percent.
Your state. A freelancer in Texas or Florida owes no state income tax. One in California or New York owes a meaningful additional share. Build your state rate into the percentage you save.
Your deductions. Home office, software, mileage, health insurance premiums, retirement contributions, and professional development all reduce the profit you are taxed on. The more you track through the year, the lower your real rate ends up being. This is exactly where most independent earners leave money on the table, because you cannot deduct an expense you never recorded.
Your bracket math. Self-employment tax is calculated on your net earnings, but income tax is calculated on net earnings minus that employer-half deduction and any other write-offs. The two are not stacked on the same number, which is why saving a flat percentage is safer than trying to do the math in your head on every invoice.
Where to actually put the money
Open a separate account, a plain savings account is fine, and move your set-aside there the day each payment clears. Not at month end. Not when you remember. The day it lands. Money that sits in your checking account gets spent, every time.
Then there is the part nobody mentions until it is too late. The IRS does not want this money once a year. It wants it four times a year. Self-employed people are generally required to make quarterly estimated payments, and missing them can trigger underpayment penalties even if you pay in full by April. The 2026 quarterly deadlines fall in April, June, September, and January. Saving the right percentage only protects you if you actually send it in on schedule.
How Sumly handles it
Knowing the percentage is the easy part. Doing it on every payment, across every platform you get paid through, while running an actual business, is where it falls apart.
Sumly brings the money side of your independent work into one place. As income arrives from Stripe, PayPal, direct deposit, or anywhere else, it gets organized and your expenses get categorized as they happen, so the profit you will actually be taxed on stays current instead of getting reconstructed in a panic each spring. That means your set-aside is based on a real number, not a guess.
What makes that number trustworthy is the layer most tools do not have. Sumly is backed by in-house licensed tax professionals, so the figures you plan around are grounded in real tax rules rather than a generic formula. You get the structure of software with the judgment of people who do this for a living.
You do not need to become a part-time bookkeeper to stop overpaying, or to stop being surprised. You need a system that keeps the separation happening as the money moves.
Start with your real number
The 25 to 30 percent rule is your floor. Your actual number depends on your income, your state, and the deductions you are capturing. The fastest way to find it is to run it.
Calculate what you should set aside with the Sumly tax calculator. Get an estimate built around your income and your situation, then make setting it aside the one financial habit you never skip.
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