Tax answer
How much should I set aside for taxes when I'm self-employed?
Short answer
For most self-employed people in Florida, setting aside 25 to 30 percent of net profit (income after business expenses) covers federal income tax plus self-employment tax. Lower earners may need closer to 15 to 20 percent; higher earners or those with large W-2 income alongside can need 35 percent or more. Florida has no state income tax, so there is nothing to set aside for that. The reliable way to do it is to move a fixed percentage of every payment into a separate account as you get paid.
Why a flat "20 percent" rule is risky
The right percentage depends on four things: your net profit after expenses, any other income (a spouse's W-2, investment income) that pushes you into a higher bracket, your filing status, and the credits and deductions you qualify for. A single number cannot be right for everyone, which is why some people who "saved 20 percent" still owe in April.
What you are actually saving for
Self-employment income gets taxed twice over:
- Self-employment tax — 15.3% (Social Security and Medicare) on about 92.35% of your net profit. Half of it is deductible against income tax.
- Federal income tax — your net profit (after the half-SE-tax deduction and any qualified business income deduction) is taxed at your marginal rate, which depends on total household income.
There is no Florida state income tax, so unlike most states, that is one thing Tampa Bay self-employed workers do not budget for.
A working range
| Situation | Rough set-aside |
|---|---|
| Lower net profit, no other income | 15 to 20 percent |
| Typical single-income self-employed | 25 to 30 percent |
| High profit, or large W-2 income alongside | 30 to 40 percent |
These are planning figures, not a promise. The Set-Aside Calculator uses your actual numbers to produce a monthly amount.
How to actually do it
- Open a separate savings account used only for taxes.
- Every time you get paid, move your chosen percentage into it immediately — before the money feels spendable.
- Pay your quarterly estimated taxes out of that account.
- Re-check the percentage mid-year if your income changes a lot.
Automating the transfer is what makes this work. Setting aside "whatever is left" almost never leaves enough.
Frequently asked questions
- Does the set-aside amount cover my quarterly payments?
- Yes — that is the point. The money you set aside is what you use to make the four estimated payments and to cover any remaining balance at filing.
- What if I have business expenses I haven't paid yet?
- Set aside based on net profit (income minus expenses). If you are tracking expenses well, your set-aside percentage applies to a smaller number.
- I also have a W-2 job. Does that change things?
- Yes. The W-2 income can push your self-employment profit into a higher bracket, so you may need a higher percentage. Extra withholding from the W-2 job can also be used to cover the self-employment tax instead of quarterly payments.
- What about years my income jumps?
- Increase the percentage and, if the jump is large, make a larger estimated payment for that quarter. The safe-harbor rules base part of the calculation on your prior year, so a big increase can still leave a balance due in April.
- Is 30 percent enough for a high earner?
- Often not. Once you are in the higher federal brackets, 35 percent or more can be necessary. This is worth modeling rather than guessing.
Written by Ross of TaxesbyRoss. Last reviewed September 1, 2026. Reflects the 2025 tax year — rules and figures change annually. This is general information, not individualized tax advice; your result depends on your own facts and records.
Want this handled for your situation?
See Set-Aside Calculator, or talk it through with Ross.