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How Much Should a Self-Employed Tradesperson Set Aside for Taxes?
Updated 2026-10-08
Two taxes, not one
When you work for yourself, nobody withholds tax from your pay, so you cover two things yourself. Self-employment tax is the Social Security and Medicare that an employer would normally split with you: 15.3% in total (12.4% Social Security, up to that year's wage base, plus 2.9% Medicare), applied to 92.35% of your net earnings from self-employment. On top of that is ordinary federal income tax at your bracket, and state income tax where your state has one.
It's a percentage of profit, not of what you invoice
Both taxes are calculated on your net earnings — income minus legitimate business expenses. That's why logging expenses matters as much as logging income: every real cost you record lowers the profit the tax is worked out on. A set-aside based on everything you invoice will usually overshoot; one that ignores costs you never recorded will overshoot by more.
Picking your percentage
There's no single right number — it depends on your profit, your bracket, your state, and deductions such as half of self-employment tax and qualified business income. The most reliable starting point is your own last return: your accountant can turn it into a percentage to hold back from each payment. Many people simply set aside a fixed share of every payment the day it lands, so the money is already there when a tax bill arrives.
Quarterly estimated tax payments
If you expect to owe a meaningful amount, the IRS generally expects estimated payments during the year rather than all at once in April. The usual due dates are April 15, June 15, September 15, and January 15 of the following year, moved to the next business day when one falls on a weekend or holiday.
General information only, not tax advice. Rates, wage bases and rules change; confirm the details for your situation with an accountant or the IRS.
How Trades Chaser keeps a running number
Set your own estimated tax rate in Settings. The Income page then shows a set-aside figure calculated on your profit for the year — paid invoices minus logged expenses — and it updates as payments and costs come in. Because it works from profit, every receipt you log brings the estimate down to something closer to what you'll actually owe.