Taxes
The tax bucket: a percentage of every dollar, untouched
The tax bucket is the simplest tax system for the self-employed: every time money arrives, a percentage goes to tax immediately — separate, visible, untouchable. The filing then pays itself.
- Percentage on arrival
Every payment contributes to tax before anything else happens.
- Separate and visible
The bucket is its own goal — never mixed with spending money.
- Dated payments
The filing dates are on the calendar; the bucket is checked two weeks ahead.
- No annual panic
Tax season becomes a transfer, not a scramble.
Choosing the percentage
| Situation | Suggested share |
|---|---|
| Part-time freelancer, low income | 15–20% |
| Full-time self-employed | 25–30% |
| High tax bracket | 30–35% |
| First year (unknown) | 30% and adjust |
Running the bucket
- Set the percentage from your real tax rate, adjusted quarterly.
- On every income date, move the share into the tax goal.
- Review the bucket against the next filing date quarterly.
- Never spend from the bucket — that is the entire system.
When the bucket is short
If the bucket does not cover the filing, the levers are: pay the installment from savings, raise the percentage going forward, or use the safe-harbor comparison.
The calendar shows the shortfall two weeks before the date — enough time to choose the lever instead of panicking at the accountant's desk.
Frequently asked questions
What is the tax bucket method?
Set aside a percentage of every incoming payment for tax, immediately and separately, so the filing date always finds the money there.
What percentage should I put in the tax bucket?
15–30% depending on income and structure — start at 25–30% for full-time self-employment and adjust quarterly.
Where should the tax bucket live?
In a separate account or goal, never mixed with spending. Visibility and separation are the whole method.
What if I over-set-aside?
The surplus is a refund or a lower next-year requirement — harmless. Under-setting is the expensive failure.
Tax season: a transfer, not a trauma
Free dated tax buckets.