How Much to Set Aside for Taxes as a Freelancer, by State
Most set-aside advice stops at federal tax. But the share of each payment you should move to savings depends on where you live, because a Texas freelancer owes no state income tax on wages and a Georgia freelancer owes about 5% on top of the federal bill. This page gives you a method and a lookup table. For the federal part we use the same worked example as our main tax set-aside guide, and you can run your own numbers in the tax set-aside calculator.
General information, tax year 2026, as we understand the figures when we wrote this. Not tax advice. State rules have exemptions, deductions and local taxes that this page does not model. Check your state tax agency or a tax professional.
The method
Set-aside % = federal % + state %
- Federal share. In our $80,000 single-filer example (self-employment tax plus income tax, standard deduction of $16,100) the federal total is about $18,831, or about 23.5% of profit. Your own figure from the calculator replaces this.
- State share. Look up your state below. If it has no income tax, the state share is zero. If it has a flat rate, multiply your profit by the rate for a quick, slightly high estimate. If it has graduated brackets, use your state's own calculator or tax tables, because the top rate listed below only applies to the highest slice of income.
- Add them, then move that percentage of each payment into a separate savings account the day you are paid.
Worked example: $80,000 profit in five flat or no-tax states
State tax here is simply the state's flat rate times profit. That ignores state exemptions and deductions, so a real bill is often lower.
| State | State rate | State tax | Federal + state | Set-aside % |
|---|---|---|---|---|
| Texas | none | $0 | $18,831 | 23.5% |
| Pennsylvania | 3.07% | $2,456 | $21,287 | 26.6% |
| Colorado | 4.40% | $3,520 | $22,351 | 27.9% |
| Illinois | 4.95% | $3,960 | $22,791 | 28.5% |
| Georgia | 5.19% | $4,152 | $22,983 | 28.7% |
The gap between Texas and Georgia is about five percentage points of every payment. State tax is not usually deductible against your federal income tax in this simple model, so the federal figure does not change.
Every state's income tax type and top rate
Source: Tax Foundation, State Individual Income Tax Rates and Brackets, 2026 (published February 2026; rates as of January 1, 2026, single filers). Rates change, so confirm with your state agency.
No wage income tax (9): Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Washington taxes capital gains only, and New Hampshire repealed its interest and dividends tax as of 2025. No income tax does not always mean no business taxes: some of these states have separate gross-receipts or franchise-type taxes, so check yours.
Flat-rate states (15):
| State | Rate | State | Rate | State | Rate |
|---|---|---|---|---|---|
| Arizona | 2.50% | Indiana | 2.95% | North Carolina | 3.99% |
| Colorado | 4.40% | Iowa | 3.80% | Ohio | 2.75% |
| Georgia | 5.19% | Kentucky | 3.50% | Pennsylvania | 3.07% |
| Idaho | 5.30% | Louisiana | 3.00% | Utah | 4.50% |
| Illinois | 4.95% | Michigan | 4.25% | Mississippi | 4.00% |
Graduated-rate states (top marginal rate only, 26 plus DC):
| State | Top rate | State | Top rate | State | Top rate |
|---|---|---|---|---|---|
| Alabama | 5.00% | Maine | 7.15% | Oklahoma | 4.50% |
| Arkansas | 3.90% | Maryland | 6.50% | Oregon | 9.90% |
| California | 13.30% | Massachusetts | 9.00% | Rhode Island | 5.99% |
| Connecticut | 6.99% | Minnesota | 9.85% | South Carolina | 6.00% |
| Delaware | 6.60% | Missouri | 4.70% | Vermont | 8.75% |
| Hawaii | 11.00% | Montana | 5.65% | Virginia | 5.75% |
| Kansas | 5.58% | Nebraska | 4.55% | West Virginia | 4.82% |
| New Jersey | 10.75% | New Mexico | 5.90% | Wisconsin | 7.65% |
| New York | 10.90% | North Dakota | 2.50% | District of Columbia | 10.75% |
A top rate is the ceiling, not your rate. Most freelancers earning $50,000 to $100,000 fall in lower brackets, so using the top rate would set aside far too much. Use the state's tax tables or a tax professional for a precise figure.
Other things that change the answer
- Local income taxes. Some cities and counties add their own tax. Check yours.
- State estimated payments. Most states with an income tax have their own estimated-payment rules and due dates, separate from the IRS. Look up your state's.
- Moving or working across states. Income can be taxed by more than one state in a year. That is a question for a tax professional.
- Deductions. Business expenses, retirement contributions and health insurance can lower your profit before either level of tax. Our expenses guide lists common ones.
A simple routine
Pick your federal % from the calculator, add your state's estimate from the table, and round up. Move that percentage of every payment into a tax savings account on the day you are paid. In April or at a quarterly check, compare year-to-date profit with your estimate and adjust.
FAQ
Do I pay state tax on freelance income?
If your state has an income tax, yes: freelance profit is generally income for state purposes too. Nine states do not tax wage income, per the Tax Foundation's 2026 table, but they may have other business taxes.
Is the top rate what I will pay?
No. For graduated states the listed top rate applies only to the highest slice of income. Most freelancers pay a lower average rate.
Should I set aside more in a high-tax state?
Usually yes. Add your state estimate to the federal percentage so each payment carries the full share. When in doubt, round up and keep the surplus as a buffer.
General information, not tax advice. Confirm every figure with the IRS, your state tax agency or a qualified professional.