How much should a freelancer set aside for taxes?

A common starting rule is 25-30% of net income for freelancers in a moderate tax bracket, covering both federal income tax and the 15.3% self-employment tax. Higher earners or those in high-tax states should model closer to 35%. This is a starting estimate, not a substitute for running your actual numbers once income is steady.

When are quarterly estimated taxes due?

Typically April 15, June 15, September 15, and January 15 of the following year (dates shift slightly if they fall on a weekend or holiday). Missing a quarter doesn't just delay the payment — the IRS can charge an underpayment penalty calculated from the missed date, not from when you eventually pay.

What deductions do freelancers miss most often?

The home office deduction (only for space used exclusively for work, but often skipped out of fear of audit), the health insurance premium deduction for self-employed individuals, and the portion of phone/internet bills actually used for work. Software subscriptions, a percentage of vehicle use for client work, and professional development courses are also commonly under-claimed.

1099 Tax Prep for Freelancers: What to Set Aside and When

The number that matters: net income, not what hits your bank account

Freelancers routinely set aside a percentage of what a client pays them — the invoice total. That's the wrong number. Tax is owed on net income: invoice total minus deductible business expenses. If you're setting aside 25% of gross revenue without ever subtracting expenses, you're very likely over-saving, which isn't harmful but does mean money sitting idle that could be working for you instead.

A starting-point framework

For a freelancer in the US with no dependents claiming the standard deduction:

Self-employment tax: 15.3% of net earnings (Social Security + Medicare), on top of income tax.
Federal income tax: varies by bracket, but 12-22% covers most solo freelancers in year one or two.
State tax: anywhere from 0% to 13%, depending on where you live.

Put together, 25-30% of net income is a reasonable default to set aside from day one. Once you have a full year of income data, replace the estimate with your actual effective rate from last year's return — it's almost always more accurate than a percentage rule.

Quarterly payments: the dates that actually matter

| Quarter | Period covered | Due date | | --- | --- | --- | | Q1 | Jan 1 – Mar 31 | April 15 | | Q2 | Apr 1 – May 31 | June 15 | | Q3 | Jun 1 – Aug 31 | September 15 | | Q4 | Sep 1 – Dec 31 | January 15 (next year) |

Note the uneven quarter lengths — Q2 is only two months and Q4 is four. The IRS calendar doesn't match calendar quarters, which catches new freelancers off guard in year one.

Deductions worth checking before you file

Home office — a defined space used exclusively for work, calculated either as a flat $5/sq ft (simplified method, capped at 300 sq ft) or as an actual-expense percentage of your home.
Self-employed health insurance premiums — often fully deductible above the line, which lowers both income tax and (in most cases) the income self-employment tax is calculated on.
Software and subscriptions — anything used for client work, including the tools you use to invoice and track expenses.
Portion of phone/internet — the percentage genuinely used for work, not a guess — keep one month of usage logged as a reference if you're ever asked to justify it.

Don't do this from memory every quarter

The reason freelancers under- or over-pay quarterly taxes isn't lack of knowledge — it's that the estimate has to be redone by hand every three months as income changes. For the payment calendar, safe-harbor math, and how a ledger tax reserve differs from an IRS payment, see quarterly estimated tax payments for freelancers. Notwen's freelance rate calculator models self-employment tax and federal/state brackets directly into your rate math, and the early access waitlist is where automatic set-aside tracking is rolling out against invoiced income — no spreadsheet, no year-end scramble. This is educational, not tax advice.