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How Much Take-Home Pay Will I Keep After Taxes as a Freelancer?

By the ClearRate team · Updated November 2026 · 6-minute read

An employee sees a paycheck with tax already taken out. A freelancer sees the full invoice — and then has to take the tax out themselves. That difference is the reason so many freelancers are shocked in April. The money was real, the work was real, and the tax bill is real too. This guide explains where the money goes, how much to set aside, and how to avoid the surprise.

The short answer

Most US freelancers keep roughly 65 to 75 percent of what they invoice, after platform fees, business expenses, and tax. The exact share depends on three things: how much of your work goes through a marketplace that takes a fee, how many deductible expenses you have, and your total income and tax rate. Run your own numbers in the take-home pay calculator: a $5,000 invoice with a 5 percent platform fee, $500 in expenses, and a 22 percent tax rate leaves $3,315 — about 66 percent. Change the fee to zero and the same invoice leaves $3,510. Change the tax rate to 30 percent and it leaves $2,975. The invoice is the same. What you keep is not.

Three deductions, in order

First, the fee. If a client finds you through a marketplace, that marketplace takes a cut — often 5 to 20 percent. A payment processor takes less, usually around 3 percent, and a direct bank transfer or check takes nothing. This is the deduction you control most directly: moving a repeat client from a marketplace to direct invoicing can be worth hundreds of dollars per job, and it costs you nothing but a conversation.

Second, the expenses. The software, the stock assets, the subcontractor, the travel — everything you spent to deliver the job. These come out of the invoice before tax, which means they reduce your taxable income as well as your cash. A $500 expense at a 22 percent tax rate costs you about $390 in real terms, because it also saves about $110 in tax. That is why tracking expenses matters so much. Every receipt you lose is money you pay tax on for no reason.

Third, the tax. Freelance income in the US is generally taxed as ordinary income, and self-employed workers also pay self-employment tax — 15.3 percent on net earnings, covering Social Security and Medicare. An employer normally pays half of that for an employee; a freelancer pays both halves. Add federal income tax, and state income tax where it applies, and the combined rate for many freelancers lands between 20 and 30 percent of taxable income. Your exact rate depends on your total annual income, your filing status, your state, and your deductions, so treat any single percentage as a planning figure, not a promise.

How much should you set aside?

The rule most freelancers use is simple: set aside 25 to 30 percent of every payment the day it arrives, in a separate savings account. If your real rate turns out to be lower, the extra money is a pleasant surprise at tax time. If it turns out to be higher, you have most of it covered. The separate account is the whole trick. Money sitting in your checking account feels available, and it will get spent — on rent, on groceries, on a new laptop that felt urgent. Money in a separate tax account feels like what it is: money that was never yours.

Open the account the week you start freelancing, not the month before tax is due. Set up the habit while the amounts are small: every time a payment lands, move the percentage the same day. Automate it if your bank allows it. The habit matters more than the exact percentage, because the percentage can be adjusted once you know your real rate, but a habit built in April is a habit built too late.

Quarterly estimated payments

Employees have tax withheld from every paycheck. Freelancers do not, so the IRS generally expects them to pay estimated tax four times a year — usually in April, June, September, and January. If you wait until April to pay the whole year at once, you may owe a penalty on top of the tax. The IRS publishes the due dates each year, and there are safe-harbor rules: in general, paying at least as much as last year’s tax, or at least 90 percent of this year’s tax, can protect you from the penalty. A tax professional can tell you whether those rules apply to you and how much to pay each quarter.

Deductions most freelancers miss

The big deductions are the obvious ones: software, equipment, and subcontractors. The missed ones are the small, boring ones that add up. The home-office deduction, if you qualify, for the portion of your home used regularly and exclusively for business. Business use of your phone and internet. Professional development — courses, books, conferences. Business travel, including mileage. Health insurance premiums, which self-employed people can often deduct. Retirement contributions to a SEP IRA or Solo 401(k), which reduce taxable income and build your future at the same time. None of these is a loophole. They are ordinary business expenses, and the tax code expects you to claim them.

For all of them, keep a record: a receipt, a note about what the expense was for, and the date. If an expense is partly personal and partly business, claim only the business portion.

The mistakes that cause the biggest tax bills

The first mistake is not setting money aside at all, and discovering in April that the tax bill is larger than the bank balance. The second is treating gross income as salary: budgeting rent and spending from the invoice total instead of the take-home total. A freelancer who invoices $8,000 in a month and spends like they earned $8,000 has spent money that belongs to the IRS. The third mistake is ignoring the first year. In your first year of freelancing, there is no last year’s tax to base a safe harbor on, and the income may be uneven — a big month followed by two quiet ones. Set aside conservatively in year one, and adjust once you have a full year of records.

The bottom line

Your invoice is not your salary. Fees, expenses, and tax come out first, and what is left — usually 65 to 75 percent — is the number to plan around. Set aside 25 to 30 percent of every payment in a separate account the day it arrives, pay quarterly estimates, track every expense, and check your real rate once a year with a tax professional.