How much of this invoice should I set aside for taxes?
Enter the amount you invoiced and your setup: you'll get how much to put aside and the percentage to keep for every future invoice.
Result
Why setting aside money from every invoice matters
When you are employed, tax and social contributions leave your paycheck before you ever see the money. As a freelancer, the full invoice lands in your account and it all looks like yours. It is not. A large share belongs to the tax office and to your pension or social security fund, and you will not pay it until months later, sometimes more than a year after the work was done.
That timing gap is what catches people out. Income earned across a year is often taxed the following spring, and many systems also ask for advance payments on top of the balance due. If you have already spent that money, you face a bill with nothing set aside to cover it. The tax set-aside calculator fixes this by telling you, for each invoice, how much to move into a separate account the moment you get paid. What stays behind is genuinely yours to spend.
Typical set-aside percentages by regime and country
There is no single correct number because it depends on your tax regime, your income level, and whether social contributions are bundled with income tax. As a working range, most freelancers should set aside between 20 percent and 35 percent of each invoice. Use these bands as a starting point:
- Flat or simplified regimes (around 20 to 25 percent): Schemes like the Italian regime forfettario or similar small-business flat taxes keep the rate low, but you still owe pension contributions on top, so 20 to 25 percent combined is realistic.
- Standard progressive income tax (around 25 to 30 percent): Once you cross into ordinary brackets, income tax plus mandatory contributions climbs. Mid-range earners commonly land here.
- Higher earners or high-contribution countries (30 to 35 percent or more): In places with steep social charges, such as parts of Germany, France, or the Netherlands, and for anyone in an upper bracket, 35 percent is safer.
If you are unsure, round up rather than down. A slightly oversized buffer becomes a pleasant surplus. An undersized one becomes debt.
How advance payments change what you set aside
Many tax systems do not wait until the year ends. They collect advance or estimated payments during the year, based on what you owed previously. This means you can be paying last year's balance and this year's advances at the same time, which briefly doubles the outflow.
Because of this, your effective set-aside rate in a growing year should be higher than your headline tax rate. If your average tax and contributions come to 27 percent but you owe advances of another 8 to 10 percent of that amount, setting aside 30 to 33 percent keeps you covered. VAT adds a separate layer: if you charge it, that money is never yours at all and should be parked in full the day the client pays. The calculator lets you factor advances in so the percentage you save reflects the real cash you will hand over, not just the textbook rate.
Practical tips to make set-aside money stick
Knowing the number is only half the job. The habit is what protects you.
- Use a separate account. Move the set-aside amount out of your main account the same day an invoice is paid. Money you cannot see is money you will not spend.
- Set aside per invoice, not per month. Doing it immediately means income spikes never tempt you into overspending.
- Recalculate when your income shifts. A strong quarter can push you into a higher band, so revisit your percentage a couple of times a year.
- Keep the buffer slightly high. Aim to over-save by a few points. Leftover funds cover an accountant, a slow month, or the first advance of the next year.
- Never treat VAT as income. If you collect it, ring-fence it completely and separately from your tax set-aside.
Frequently asked questions
What percentage of each invoice should I set aside for tax?
For most freelancers, 20 to 35 percent per invoice is the right range. Flat or simplified regimes often sit near 20 to 25 percent, standard income-tax brackets around 25 to 30 percent, and higher earners or high-contribution countries closer to 30 to 35 percent. If you are unsure, use 30 percent and adjust once you see an actual tax bill.
Why do I need to set money aside at all instead of paying as I go?
Because freelance tax and social contributions are usually paid months after you earn the income, sometimes over a year later. The full invoice arrives in your account and feels like profit, but part of it is owed to the tax office and your pension fund. Setting aside on each payment means the money is waiting when the bill lands.
Should I include social security and pension contributions in the set-aside?
Yes. In many countries contributions are as large as, or larger than, income tax itself, and skipping them is the most common reason freelancers come up short. The percentages here assume income tax plus mandatory contributions combined. If your system bills them separately, add both when you set your rate.
How do advance or estimated tax payments affect the amount I save?
Advances mean you may pay last year's balance and this year's estimated tax in the same period, which raises your effective outflow above your headline rate. In a growing income year, set aside a few points more than your average tax rate, for example 30 to 33 percent when your real rate is around 27 percent, so the advances are covered.
Should VAT be part of my tax set-aside?
Keep it separate. If you charge VAT, that money was never yours and must be passed to the tax authority in full, so park 100 percent of it the day the client pays. Your income-tax and contributions set-aside is a different pot calculated on your net earnings, not on the VAT you collected.
Where should I keep the money I set aside?
In a separate account from your day-to-day spending, ideally a savings account that earns a little interest. Transfer the set-aside amount the same day each invoice is paid. Physically separating the money is what stops it from being spent, and a small buffer above the exact figure covers accountant fees or a slow month.