How Much Should You Set Aside for Freelance Taxes?

Nobody is withholding tax for you

The hardest mental shift for new freelancers is realising that the full payment hitting your account is not all yours. A portion already belongs to the tax authority — it just has not been collected yet. Employees never feel this because withholding happens invisibly. Freelancers have to do it themselves.

The freelancers who panic in tax season are almost always the ones who spent the whole payment. The ones who stay calm quietly moved a slice aside every single time money landed.

A rule of thumb, then a real number

A common starting point is to set aside 25–30% of every payment. It is a rough guide, not gospel — your real figure depends on your income, your deductions and where you live. Use our Freelance Tax Estimator to turn the guess into a personalised percentage based on your own rates.

Whatever percentage you land on, automate it. The moment a client pays, transfer that share into a separate savings account you mentally treat as untouchable. When the bill arrives, the money is already waiting.

Deductions lower the bill

Legitimate business expenses reduce your taxable income, so track them all year, not in a frantic scramble later. Software, equipment, a portion of your home office, professional fees and relevant subscriptions typically count, though rules vary by country.

None of this replaces an accountant. For anything beyond the basics, a professional usually saves more than they cost — and removes a whole category of stress.