TooziHow much of each payment should I set aside for taxes?
The 25 to 30% rule is a guess. This gives you your own number: the share of each business dollar that covers self-employment tax plus the income tax that dollar adds, using the 2026 brackets.
Rate per dollar of profit. If you set aside from gross payments instead, multiply by your profit margin. 2026 federal rates, standard deduction, no credits.
Why a flat 30% is often wrong
Someone clearing $20,000 with no other income owes mostly self-employment tax and very little income tax, so 30% is too much. Someone with a $90,000 day job and a $30,000 side business is already in the 22% bracket before the first business dollar, so 30% is too little once SE tax is added.
Your rate depends on where the business income lands on top of everything else. That is what the calculator figures.
Where to put it
A separate savings account you move money into the day you get paid. Not the checking account the rent comes out of. When a quarterly date arrives the money is there, and the payment feels like moving money, not losing it.
Toozi does this automatically: each payment you log gets a set-aside amount, and the tax wallet shows what is covered for the quarter.
Stop estimating. Have Toozi keep the running number.
Text your income and expenses as they happen. Toozi keeps the books, sets aside the right amount from each payment, texts you before every due date, and e-files the return.
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Questions
Should I set aside a percentage of revenue or profit?
The rate here is per dollar of profit. If you set aside from gross payments, use a lower percentage, roughly this rate times your profit margin, or just set aside from profit after you pay the month's expenses.
Does it include state tax?
No. Add your state's rate on the business income if your state has an income tax. Many self-employed people add 5 to 10 points for state.
What if I set aside too much?
You get it back as a refund or carry it to next year's estimates. Too little means a balance due plus possible penalty, so round up.
Tax is a doozy.
Toozi isn't.
Text (844) 482-4881 and your first expense is logged in 10 seconds.