The amount of income you set aside should be enough to comfortably cover your income tax rate as well as your “self-employment tax” contributions to social security and medicare. These taxes add up to 15.3% upon all net income.
Income tax rates vary according to the brackets established by the IRS for each year. Many real estate agents fall into the $40,126 – $85,525 income range, which requires $4617.50 plus 22% of the amount earned over $40,125.
Adding the two percentages yields 27.3% of net income taxed — “net income” meaning gross income minus deductions. A good rule of thumb can be to set aside 30% of gross income so that you can cover any expected tax costs plus any unplanned expenses related to filing or unexpected income, but every individual case is different. The exact amount you should set aside depends upon your estimated income adjusted for expenses, and filing jointly with your spouse can affect this calculation.