A Set-Aside Percentage for Irregular Income: Keeping the Quarterly Tax Bill From Becoming a Debt

Freelance and gig income arrives untaxed, and the quarterly tax bill is where that fact collects its debt. This paper simulates twenty thousand household-years of irregular monthly income (median USD 4,100, lognormal) taxed at a stated effective structure — 24% of annual income above a USD 12,000 allowance, a mean effective rate of 18.8% — and asks what fixed percentage of each receipt, set aside on arrival, keeps the tax account solvent at every quarter. Setting aside the mean effective rate itself fails in a large share of years, because high-income quarters raise the bill faster than lean quarters refill the account in the wrong order. A set-aside of 25% leaves shortfalls in 22.2% of years; 28% leaves 12.4%; 30% leaves 8.6%. The recommended rule is the mean effective rate plus a margin for variance, computed here as 28%. The study is simulated, not measured. SIMULATED, NOT MEASURED.