How Much Should You Set Aside for Taxes?

"How much should I save for taxes?"

It's one of the first questions I hear from people who are self-employed or earning income outside a traditional paycheck.

And there isn't one percentage that works for everyone.

Why the 30% Rule Isn't Always Enough

You may have heard:

"Just save 30%."

That can be a useful starting point for some people, but it is not a personalized tax calculation.

Your actual tax liability depends on your income, filing status, deductions, credits, state taxes, self-employment income, and other factors.

Start With Your Actual Numbers

Instead of choosing a percentage at random, estimate your income for the year.

Then consider:

• Federal income tax

• Self-employment tax, if applicable

• State and local taxes

• Estimated payments already made

• Withholding from other income

• Expected deductions and credits

The IRS provides Form 1040-ES and related worksheets for calculating estimated tax.

Keep Tax Money Separate

If you're self-employed, one of the easiest ways to create a cash-flow problem is to treat every dollar that hits your business bank account as spendable.

Consider maintaining a separate savings account for taxes.

When income comes in, move an appropriate amount into that account.

Now your tax money isn't mixed in with operating cash.

Review It During the Year

Your estimate from January may not be accurate in September.

Maybe revenue increased.

Maybe expenses changed.

Maybe you started another source of income.

Maybe your business slowed down.

Your tax estimate should change with your circumstances.

Don't Wait Until April

By the time you file your return, most of the year's tax decisions have already happened.

Planning throughout the year gives you more options.

For individuals who need to make estimated payments, the IRS has specific quarterly due dates. For 2026, the third estimated tax payment was due September 15.

The Bottom Line

Don't pick a tax savings percentage because someone on social media told you to.

Use your actual numbers.

Review them regularly.

And make sure your tax savings account reflects what you may actually owe.