Tax Set-Aside Calculator
Split each payment the moment it arrives, before it has a chance to feel like yours. Enter what landed and see exactly how much to move out of reach.
Move to your tax account
$864
Leaving $2,636 of this payment as business income.
This payment, split
- Yours to use$2,63675%
- Tax reserve$86425%
- Sales tax held$00%
If your rate turns out different
- Reserve at 20%$640
- Reserve at 30%$960
- Reserve at 35%$1,120
- Shortfall if you reserved nothing$864owed anyway
Note for your bookkeeping
Payment received: $3,500 Deductible costs on this job: $300 Move to the tax reserve account: $864 (27% of $3,200) Safe to treat as business income: $2,636 At this rate, a full year at $6,500 a month reserves $20,088.
Read the full guide
The habit, not the arithmetic
Almost nobody who ends up with an unpayable tax bill got the sums wrong. They simply spent money that was never theirs, in small justified amounts, across eleven months. A client pays, the balance looks healthy, a laptop needs replacing, a deposit is due, and by the time the bill arrives the money has been gone so long it feels like bad luck rather than arithmetic.
The defence is mechanical and takes ninety seconds. Every time a payment lands, you split it before you look at the balance: the tax share moves to a separate account, the sales tax you collected moves with it, and what is left is the only money that exists. This calculator does the splitting so there is no reason to postpone it.
Setting the percentage
The right figure depends on where you live, how you are structured, what else you earn and what you can deduct, which is exactly why this tool applies whatever number you type instead of pretending to know. The presets are widely quoted total set-aside rates rather than calculations: roughly 25 to 30 percent for a US solo operator once self-employment tax is included, around 28 percent for a UK sole trader paying income tax and Class 4 contributions, and close to nothing on personal income in Saudi Arabia and the wider Gulf — though commercial invoicing there can still involve VAT and registration obligations worth asking an accountant about rather than guessing.
If you genuinely do not know, reserve 30 percent. Over-reserving costs you a little flexibility. Under-reserving costs you a January you will remember for years.
Sales tax was never income
If you charge VAT or sales tax, that portion of the payment belongs to the tax authority from the instant it arrives. Treating it as revenue is the most common way an otherwise careful freelancer ends up short, because it inflates every figure you look at: your monthly income, your growth, your sense of how the year is going. Enter it here and the tool takes it out before anything else happens.
Making it stick
- A separate account, with no card. Friction is the whole point. Money that takes two deliberate steps to reach is money that survives.
- Split on receipt, not monthly. Monthly reconciliation means a month of looking at an inflated balance and making decisions against it.
- Never borrow from it. Not for a genuine emergency, not for a quarter, not with every intention of repaying. This rule only works absolutely.
- Reconcile quarterly with real figures. Compare what you reserved against what your accountant says you owe, and adjust the percentage rather than hoping.
Do this for one full year and something quietly changes: the tax bill becomes an administrative event rather than a crisis, and the money left over after it is genuinely, unambiguously yours.
Frequently asked questions
- Is this tax advice?
- No. It is arithmetic on a percentage you choose. The regional presets are commonly quoted total set-aside figures, not calculations of what you owe, and only an accountant who knows your situation can give you the right number.
- Where should the set-aside money actually go?
- A separate account you do not carry a card for. The split only works if moving the money is a deliberate act and spending it is inconvenient.
- Should I set aside on gross revenue or on profit?
- On profit, which is why this tool subtracts deductible costs before applying your percentage. Setting aside on gross is safer but ties up money you could be using.
- What about VAT or sales tax?
- It is never yours. If you charge it, it belongs to the tax authority from the moment it lands, so add it to the reserve field rather than treating it as income at all.
- What if I set aside too much?
- You end the year with a surplus, which is a far better problem than the alternative. Most people who have once faced an unfunded tax bill deliberately over-reserve for the rest of their working life.