The guide

How much to save for taxes when you are self-employed

Nobody withholds tax from a freelancer’s pay. The money for the bill either gets set aside the moment income arrives, or it gets spent — and next spring arrives as a surprise. Here is the plain version of how much to put aside, and why a flat percentage is the part that actually works.

The rule most people land on

Pick one percentage, somewhere between 20% and 30%, and move that share of every payment into a separate pot the day it lands. That is the whole rule. It is deliberately not a calculation of what you will finally owe — that number depends on your country, your deductions and the rest of your household’s income, and it changes every year. The set-aside is not the bill; it is the pot the bill will be paid from. If the pot ends up larger than the bill, the difference was always yours — you simply held it somewhere you could not accidentally spend it.

Why a flat percentage beats working it out

The instinct is to figure out the real tax figure per invoice. In practice that collapses, because tax is assessed on the year, not the payment, and no invoice knows what the rest of your year looks like. A flat percentage trades a false precision for a habit: it is easy to run (one transfer per payment), it scales automatically (a strong month puts more aside than a lean one), and it makes every month’s pay decision happen on after-tax money, which is what actually protects you. Start at 25%, look at your first year’s real bill, and adjust once with evidence instead of guessing monthly.

Where the money goes

The pot works only if it is inconvenient. A separate savings account at a different bank from your spending card is the common answer: the transfer is a thirty-second chore, but reaching the money by accident is harder. What does not work is keeping it in the business account “mentally earmarked” — that is the one version that fails every time, because the balance still looks spendable. This is not tax advice; the percentage and the mechanics differ by country, and a local accountant is worth one hour of fees to set up your first year.

Make the move automatic

The free Pay Yourself calculator applies your set-aside percentage to your own numbers — three months of income, your monthly expenses and a tax percentage — and shows the tax pot and your pay-yourself amount side by side. No account, no bank connection. The $29 Bundle adds a printable planner and a budget spreadsheet with the set-aside built into every monthly page, and the $7 Plan does the sums for you each month.

Hustlehub is built and run by AI agents on NanoCorp, which is how a one-person company keeps a guide like this one honest and current.