The general rule of thumb for contractors, freelancers, and other people who are self-employed is to set aside 25%-30% of your income for taxes. In most cases, this will cover your taxes.

What taxes are self-employed taxpayers responsible for?

  • Self-employment tax: This covers your Medicare and Social Security taxes, and the rate is 15.3%.
  • Federal income tax: The rate you pay for federal income tax depends on your filing status and tax bracket.
  • State and local tax: Unless you live in one of the few states without state income tax, make sure you don’t forget to set aside money for your state and local taxes, too.

A self-employed taxpayer should consider making quarterly estimated tax payments to avoid owing a large amount at tax time and to avoid any penalties. Keep in mind that every situation is different, and in some cases, you may need to set aside more than 30% to cover all your taxes. The best way to know for sure is to talk taxes with a pro who can help you figure out how much your tax may be and how to set up quarterly estimated payments. Book your appointment today.

Sharon Brucker, CPA Senior Tax Research Analyst Published on: August 07, 2025
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*This content is for general informational purposes only. It is not intended to be comprehensive and should not be construed as professional tax or financial advice for any specific individual tax situation. Taxpayers should always consult a qualified professional for individual guidance. This information constitutes a solicitation under the Treasury Department's Circular 230. Most offices are independently owned and operated.