{
  "slug": "side-income-tax-set-aside",
  "title": "Side Income Tax Set-Aside Calculator",
  "heading": "Side Income Tax Set-Aside Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/side-income-tax-set-aside",
  "summary": "How much of every freelance or creator payment to hold back for tax.",
  "description": "Side income arrives without withholding, which means the tax bill arrives all at once later. This calculator estimates the percentage of each payment to move into a separate account: self-employment tax on net profit plus income tax at your marginal rate, after deductible business expenses. It returns the set-aside rate, the dollar amount per payment, and an estimated quarterly instalment, so you can automate the transfer the moment money lands. Treating that transfer as non-negotiable is what separates people who enjoy side income from people who dread April.",
  "formula": "Net profit = gross − expenses. SE tax ≈ net profit × 92.35% × SE rate. Income tax ≈ (net profit − half of SE tax) × marginal rate. Set-aside % = total tax ÷ gross.",
  "dateModified": "2026-08-25",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=side-income-tax-set-aside",
  "inputs": [
    {
      "id": "gross",
      "label": "Expected side income",
      "kind": "number",
      "hint": null,
      "default": 24000,
      "unit": "$/yr",
      "min": 0,
      "max": null
    },
    {
      "id": "expenses",
      "label": "Deductible business expenses",
      "kind": "number",
      "hint": null,
      "default": 3600,
      "unit": "$/yr",
      "min": 0,
      "max": null
    },
    {
      "id": "seRate",
      "label": "Self-employment tax rate",
      "kind": "number",
      "hint": null,
      "default": 15.3,
      "unit": "%",
      "min": 0,
      "max": 30
    },
    {
      "id": "marginal",
      "label": "Marginal income tax rate",
      "kind": "number",
      "hint": null,
      "default": 22,
      "unit": "%",
      "min": 0,
      "max": 60
    },
    {
      "id": "stateRate",
      "label": "State income tax rate",
      "kind": "number",
      "hint": null,
      "default": 5,
      "unit": "%",
      "min": 0,
      "max": 15
    },
    {
      "id": "perPayment",
      "label": "Typical payment size",
      "kind": "number",
      "hint": null,
      "default": 1500,
      "unit": "$",
      "min": 0,
      "max": null
    }
  ],
  "outputs": [
    {
      "id": "setAsideRate",
      "label": "Set aside this share of every payment",
      "format": "percent",
      "hint": null,
      "primary": true
    },
    {
      "id": "perPayment",
      "label": "Hold back per typical payment",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "quarterly",
      "label": "Estimated quarterly instalment",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "totalTax",
      "label": "Total estimated tax",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "seTax",
      "label": "Self-employment tax portion",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "keep",
      "label": "What you actually keep",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Expected side income: 24000 $/yr",
      "Deductible business expenses: 3600 $/yr",
      "Self-employment tax rate: 15.3 %",
      "Marginal income tax rate: 22 %",
      "State income tax rate: 5 %",
      "Typical payment size: 1500 $"
    ],
    "outputs": [
      "Set aside this share of every payment: 33.3%",
      "Hold back per typical payment: $500.08",
      "Estimated quarterly instalment: $2,000.33",
      "Total estimated tax: $8,001.30",
      "Self-employment tax portion: $2,882.43",
      "What you actually keep: $12,398.70"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter expected side income ($/yr).",
      "Enter deductible business expenses ($/yr).",
      "Enter self-employment tax rate (%).",
      "Enter marginal income tax rate (%).",
      "Enter state income tax rate (%).",
      "Enter typical payment size ($).",
      "Read your set aside this share of every payment on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "gross": 14500,
        "expenses": 2200,
        "seRate": 9.18,
        "marginal": 13,
        "stateRate": 3,
        "perPayment": 900
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "gross": 24000,
        "expenses": 3600,
        "seRate": 15.3,
        "marginal": 22,
        "stateRate": 5,
        "perPayment": 1500
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "gross": 38500,
        "expenses": 5800,
        "seRate": 24.480000000000004,
        "marginal": 35,
        "stateRate": 8,
        "perPayment": 2400
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "Is this a substitute for a tax professional?",
      "a": "No. This is a planning estimate to size a set-aside, not a filing. Brackets, thresholds, deductions like QBI, and state rules change annually and vary by situation — confirm your actual liability with a qualified preparer before relying on a number."
    },
    {
      "q": "Do I have to pay quarterly estimated tax?",
      "a": "In the US, generally yes once you expect to owe a meaningful amount beyond withholding, and underpayment penalties apply if you fall short. One common workaround for people with a day job is to increase W-2 withholding to cover the side income instead of filing quarterlies."
    },
    {
      "q": "What counts as a deductible expense?",
      "a": "Costs that are ordinary and necessary for the work — software, equipment, a portion of home internet, professional fees, mileage for business travel. Keep contemporaneous records; a deduction you cannot evidence is a deduction you cannot defend."
    },
    {
      "q": "Why is the self-employment tax base 92.35% of profit?",
      "a": "The rule allows a deduction for the employer-equivalent portion before the tax is applied, so the base is net profit multiplied by 0.9235. It is a small reduction but it is built into the standard calculation, which is why it appears here."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/consulting-day-rate",
    "https://www.revenuelab.fyi/toolbox/personal-runway-months",
    "https://www.revenuelab.fyi/toolbox/savings-goal-date"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Side Income Tax Set-Aside Calculator (https://www.revenuelab.fyi/toolbox/side-income-tax-set-aside)"
}