Freelance Tax Set-Aside Calculator

Estimate the percentage of each freelance invoice to park in a separate tax savings account so quarterly / year-end tax bills are fully funded with no panic.

Last reviewed by Vanta Calc editorial

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Result

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Freelancers and self-employed contractors pay tax in arrears, often quarterly, and the bill can be alarmingly large for first-year freelancers who treated every invoice payment as spendable income. This calculator estimates the percentage of each payment you should park in a separate tax savings account so the year-end / quarterly bill is fully funded — with a small safety buffer for bracket creep and missed deductions.

Enter your average monthly gross revenue, your effective income tax bracket, your self-employment / national insurance rate (US SE tax 15.3%, UK Class 4 ~9%, AU 0%), state or local rate if applicable, an estimate of business expenses you'll deduct as a percentage of revenue (10-25% is typical for service freelancers), and a small buffer for safety. The output is the percentage of each invoice to set aside, the monthly dollar amount, and a quarterly estimated-payment figure.

Examples

US freelancer, $10k/month, moderate income

$10k/mo, 22% federal, 15.3% SE, 5% state, 15% deductibles, 5% buffer → taxable share 85%, combined rate 42.3%, set-aside ≈ 41.0% of gross = $4,100/mo. Quarterly estimated payment ≈ $12,300.

UK contractor outside IR35, £8k/month

£8k/mo (treat as $ in the calculator), 40% UK higher rate, 9% Class 4 NI, 0% state, 15% deductibles, 5% buffer → taxable share 85%, combined rate 49%, set-aside ≈ 46.6% of gross = ~£3,730/mo. UK self-assessment is annual but the savings discipline is the same.

AU sole trader, AU$8k/month

AU$8k/mo, 32.5% income tax bracket, 0% SE (sole traders pay only income tax), 0% state, 15% deductibles, 5% buffer → taxable share 85%, combined 32.5%, set-aside ≈ 32.6% of gross = AU$2,608/mo. AU PAYG instalments are quarterly.

Frequently Asked Questions

Should this money sit in a separate account?
Yes — physically separate, ideally a high-yield savings account that does not have a debit card attached. The number-one reason freelancers fail to pay quarterly tax is co-mingling tax savings with operating cash and "borrowing" against it. Out of sight is the only reliable discipline.
Why is self-employment tax so high in the US?
15.3% covers both the employee and employer halves of Social Security (12.4%) and Medicare (2.9%) contributions. As an employee, your employer paid half; as a freelancer, you pay both. Half of the SE tax is itself deductible from your federal income tax, slightly softening the blow — the calculator does not model this nuance.
What if my income varies wildly month to month?
Calculate the set-aside % once (using your annual income / 12 as the gross input). Apply that fixed percentage to every invoice as it lands. Lumpy months self-correct: a high-revenue month sets aside proportionally more, low months less, and over the year the totals match.
How does this connect to quarterly estimated payments?
The quarterly figure shown is what you would pay to your tax authority each quarter (US: April / June / September / January). Pay from the savings account; if you have set aside the full %, the account never runs dry. UK self-assessment is annual + 2 payments on account (similar dynamic).
What happens if I get a big surprise deduction I didn't account for?
You over-saved — the surplus carries to the next quarter. Better than the reverse. Treat the buffer as the absorber of small surprises (5% covers ~$5k of unexpected tax on $100k gross income). For larger swings, recalculate.

Sources

  1. IRS — Estimated Taxes for Self-Employed — Internal Revenue Service (IRS)
  2. HMRC — Self Assessment payment dates — GOV.UK
  3. ATO — PAYG instalments for sole traders — Australian Taxation Office
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Quick Tips

Double check your inputs. Ensure units match (e.g., inches vs cm).

Did you know?
Calculators are estimates. Consult professionals for critical decisions.