How much to set aside for taxes
Pick your country, type what you expect to make this year, and get the share of every invoice to move into a tax account the day it is paid.
Last updated 17 October 2026
Why the percentage, not the rule of thumb
"Set aside 30 percent" is the advice every freelancer hears. It is right for some incomes in some countries and wrong by ten points in others. Tax is progressive: the first slice of profit is free, the next slice is taxed lightly, and only the slice above the middle band costs the headline rate. A freelancer on £30,000 in the UK owes about 15 percent of profit; on £80,000, about 28. In India under 44ADA, half of receipts are treated as expenses, so the share of each invoice is often under 5 percent.
The second mistake is setting aside a share of profit while the money arrives as revenue. If your expenses run at 15 percent of invoices, a 25 percent tax on profit is only 21 percent of each invoice. The calculator does that conversion, which is why the big number is lower than the "share of profit" line underneath it.
What is in the number, by country
| Country | Included | Not included |
|---|---|---|
| United States | Self-employment tax 15.3% on 92.35% of profit (Social Security part capped at $184,500), federal income tax on profit minus half the SE tax and the standard deduction, your state rate if entered | QBI deduction (often 20% off taxable profit, which lowers the figure), local taxes, health insurance deduction |
| United Kingdom | Income Tax with the £12,570 allowance and its taper, Class 4 NI at 6% and 2% | Scottish bands, student loan, Class 2 voluntary payments |
| Canada | Federal tax with the $16,452 basic amount, Ontario, BC or Alberta tax with the provincial basic amount, CPP and CPP2 at the self-employed rates (half is deductible) | Other provinces, Ontario surtax and health premium above about $100,000, EI (optional for the self-employed) |
| Australia | Resident rates with the 15% band, low income tax offset, Medicare levy 2% with the low-income phase-in | Medicare levy surcharge, HELP repayments, super contributions you choose to make |
| India | Section 44ADA: 50% of receipts deemed profit, new-regime slabs, Section 87A rebate up to ₹12 lakh, 4% cess | Old regime, surcharge above ₹50 lakh, TDS already deducted by clients (it reduces what you pay later, not what you owe) |
The habit that makes it work
Where the rates come from
- US: IRS 2026 brackets and standard deduction, Social Security wage base $184,500. Detail on the US quarterly tax calculator.
- UK: GOV.UK rates for 2026/27, Class 4 NI 6% and 2%. Detail on the UK sole trader tax calculator.
- Canada: CRA 2026 federal brackets (14% to 33%) and basic personal amount $16,452; Ontario, BC and Alberta brackets and basic amounts for 2026; CPP YMPE $74,600, YAMPE $85,000, self-employed 11.9% and 8%, via the CFIB 2026 payroll tables and CRA income tax rates.
- Australia: ATO resident rates 2026-27, LITO, Medicare levy thresholds. Detail on the Australia sole trader tax calculator.
- India: Income-tax Act 2025 slabs for FY 2026-27, Section 44ADA. Detail on the India 44ADA calculator.
Questions people ask
How much should a freelancer set aside for taxes?
Between 20 and 35 percent of profit in most countries, rising with income. At $60,000 of profit a US freelancer filing single needs about 22 percent for federal income tax and self-employment tax before state tax; a UK sole trader on £45,000 about 19 percent; an Australian on A$80,000 about 20 percent; a Canadian in Ontario on C$75,000 about 27 percent; an Indian freelancer on ₹20 lakh of receipts under 44ADA nothing at all, because half the receipts are deemed expenses and the rest sits under the ₹12 lakh rebate line (about 3 percent at ₹30 lakh). The calculator gives the figure for your number.
Should I set aside a percentage of revenue or of profit?
Tax is calculated on profit, but the money arrives as revenue, so the practical habit is to move a fixed share of every invoice. Work out the tax on your expected profit, divide it by expected revenue, and move that share the day a client pays. If expenses are 15 percent of revenue, a 25 percent tax on profit is about 21 percent of each invoice. The calculator shows both numbers.
Is 30 percent the right rule of thumb?
It is a safe ceiling for most freelancers under about $100,000 in the US, UK, Canada and Australia, and too much for lower incomes or for India under 44ADA. Setting aside too much only costs you cash flow for a year; setting aside too little costs interest, penalties and a January you will remember. If you cannot be bothered with the exact figure, 30 percent is the better mistake.
Where should the tax money go?
A separate account you do not see every day, ideally one that pays interest, at the same bank so transfers are instant. Move the share the day each invoice is paid, not at month end. Some freelancers use a second account for VAT or GST collected, since that money was never theirs.
Does this include VAT, GST or sales tax?
No. VAT, GST and HST are collected on top of your price and passed on, so they are not a cost to set aside from your income; keep them in a separate pot as they come in. The figure here covers income tax and social contributions on your profit only. The detailed calculator for each country covers the VAT or GST threshold.
What about state, provincial or local taxes?
US: add your state rate in the field provided; nine states have no income tax and California tops out at 13.3 percent. Canada: the calculator includes Ontario, British Columbia and Alberta provincial tax; other provinces differ by a few points. UK, Australia and India have no separate state income tax on freelance profit.
Keep going
US quarterly tax calculator UK sole trader tax calculator Canada GST/HST calculator Australia sole trader tax calculator India 44ADA calculator Hourly rate calculatorThe tax account fills itself when you can see the money
Go Lancer tracks what came in and what is still unpaid, shows the next three months, and keeps every invoice ready for the return. Built with 100+ freelancers.