Irregular Income Budget Calculator
Three months, your costs, and what the taxman takes first
Your result will appear here
Fill in the fields on the left and this updates as you type.
Know what this estimate is based on
- Jurisdiction
- General mathematical model
- Scope and limitations
- Planning estimate only. Enter complete, current figures and keep an appropriate buffer for irregular or unexpected expenses.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter the lowest month of gross income you can genuinely expect — look back over twelve months of deposits and take the worst one that was not a fluke. That number, not the average, is what the whole page is built on.
- 02
Add a typical month and a good month. They do not set the budget; they size the surplus you will be banking and the buffer that surplus fills.
- 03
Enter your monthly business expenses and the income tax rate you expect on the profit. Self-employment tax is already handled: 15.3% on 92.35% of net profit, with both figures as editable statutory fields.
- 04
Enter your essential household costs — the number you must cover no matter what — plus the discretionary spending you would cut in a thin month, and whatever cash you already hold as an income buffer.
- 05
Read the monthly draw, then check it against the essential-costs floor. Everything a typical month earns above that draw goes to the buffer until the buffer is full, and the buffer is reported in months of essential costs rather than in dollars.
Formula
For any month: net profit = gross − business expenses. Self-employment tax = profit × 92.35% × 15.3%. Income tax = (profit − half the self-employment tax) × your income tax rate, because half of the self-employment tax is deductible. Cash after tax = profit − self-employment tax − income tax. Your monthly draw is the cash after tax from the LOWEST month. Surplus in any other month = that month's cash after tax − the draw. Buffer target = the months guideline × essential monthly costs; months to fill it = what is still missing ÷ the typical month's surplus.
Example
A freelancer whose worst plausible month grosses $5,200, whose typical month grosses $8,400 and whose good month grosses $14,000, against $700 of monthly business expenses and an 18% income tax rate. The worst month leaves $4,500 of profit; self-employment tax takes $636 and income tax $753, so $1,389 goes to tax and $3,111 is the monthly draw. A typical month leaves $7,700 of profit, $2,376 of tax — an effective 31% — and $5,324 of cash, so $2,213 a month goes to the buffer; a good month banks $6,085. Against $2,900 of essential household costs the draw clears the floor with $211 to spare, which is the state the method is aiming for. The buffer target is three months of essentials, $8,700, and at $2,213 of typical-month surplus it fills in about four months.
Definitions
- Self-employment tax
- Social Security and Medicare on self-employment income: 15.3% applied to 92.35% of net profit, made up of 12.4% Social Security up to the wage base and 2.9% Medicare with no ceiling. Half of it is deductible against income tax.
- Net profit
- Gross receipts less deductible business expenses. It is the base for both self-employment tax and income tax, and it is not the same as what lands in the bank.
- The draw
- The fixed amount you move from the business account to the personal account each month — set here at what the worst plausible month leaves after business costs and tax.
- Income buffer
- Cash held to cover the gap between the draw and a month that came in below it. Measured in months of essential costs, and separate from an emergency fund.
- Estimated quarterly tax
- Tax paid four times a year rather than at filing — due 15 April, 15 June, 15 September and 15 January. Underpaying triggers a penalty even if the annual return is correct.
Good to know
Pay yourself a salary out of a variable business
Every ordinary budgeting method assumes an income you can name in advance, which is why they all fail on commission, freelance, gig and seasonal income. The standard fix is not a different budget but an extra step in front of it: convert the variable stream into a fixed one, then budget the fixed one normally. Mechanically it is three accounts and a monthly ritual, not willpower. Everything you earn lands in a business account. On a fixed day each month you move three amounts out of it — the tax set-aside to a savings account you never touch, the surplus above your salary to a buffer, and exactly your salary to the personal account you actually spend from. The personal account then behaves like a paycheck, and every conventional tool works again: zero-based budgeting, sinking funds, automatic transfers, the lot. The discipline lives entirely at the transfer, which happens once a month and takes two minutes, rather than in a thousand spending decisions where discipline is expensive. The separation also does something quieter and more valuable: it stops a good month from feeling like wealth. Money that never enters the personal account is never mistaken for spendable, and a large deposit stops being an event.
The floor, not the average
The salary is set at what your worst plausible month leaves, and the reason is structural rather than conservative. You cannot spend an average in a month that did not deliver it. An average is a fact about a year; a bill is a fact about a month, and a bill met from an income that did not arrive is met with credit. Budget at the middle of your range and every month below the middle produces a shortfall, which means roughly half your months produce one. Picking the floor is a matter of evidence, not instinct: pull twelve months of deposits, sort them, and take the worst month that was not a genuine one-off. Exclude the month a client went bankrupt or you were in hospital — that is what the emergency fund is for — but do not exclude the ordinary bad month, because ordinary bad months recur. If the floor you arrive at does not cover your essential household costs, the page will say so, and that is the finding rather than a defect: either the fixed costs have to come down, or the buffer has to be large enough to bridge every run of thin months you can imagine, and the second option is expensive because it competes with everything else the surplus was for.
Tax is not income, and it is due four times a year
The largest single mistake on self-employed income is treating the deposit as earnings. It is gross revenue, and three things come out of it before any of it is yours. Business expenses come out first and reduce the profit everything else is measured on. Then self-employment tax: 15.3% applied to 92.35% of net profit, made up of 12.4% for Social Security up to the annual wage base and 2.9% for Medicare with no ceiling at all, which is why high earners keep paying the Medicare portion after the Social Security portion stops. The 92.35% is not a rounding convention — it exists to mirror the employer-side deduction an employee's payroll tax gets, and half of the resulting self-employment tax is then deductible against income tax, which is why the income-tax base is smaller than the profit. Income tax comes last, at your own marginal rate. On a typical month at an 18% income tax rate the combined bite lands near 31% of profit. And it is due quarterly — 15 April, 15 June, 15 September and 15 January for the period before each — not in April, with an underpayment penalty attached even when the annual return is correct. Money kept in the operating account until the bill arrives is money that has already been spent by the business.
The buffer, and the order everything else comes in
The buffer is what turns a variable income into a salary, and it is measured in months of essential household costs rather than in dollars, because the question it answers is how long you can go. Three to six months is the working guideline and the right number depends on the shape of your risk: a consultant with three long-running retainers can run thinner than a commission earner whose entire quarter can miss. It is emphatically not an emergency fund, and running one pot for both purposes reliably produces neither — the buffer smooths an expected bad month, which you have already budgeted for, while the emergency fund covers a transmission or a hospital bill, which you have not. Spend the emergency fund on an ordinary slow month and it was never an emergency fund. Once the buffer is full, the order of operations for surplus is worth fixing in advance: high-rate debt first, because a 24% card beats every market assumption anyone will offer you; then retirement, where the self-employed have unusually good options in a solo 401(k) or a SEP; then everything else. Retirement contributions made from a full buffer are a decision. The same contributions made from an empty one are a loan from next quarter, unwound at tax plus penalty.
Frequently asked questions
How do you budget on income that changes every month?
Pay yourself a fixed salary out of a variable business, and set that salary at what your worst plausible month leaves after business costs and tax. Everything above it in a good month goes to a buffer, and the buffer funds the months that come in below the floor. The point is to make the personal side of your finances behave like a salary, because every ordinary budgeting tool works again the moment it does.
Why not just budget on my average month?
Because you cannot spend an average in a month that did not deliver it. An average is a fact about a year; a bill is a fact about a month. Budget at the middle of your range and every month below the middle produces a shortfall, and shortfalls on variable income are financed with credit cards rather than with smaller months.
How much tax should I set aside?
This page computes it rather than guessing: self-employment tax is 15.3% of 92.35% of your net profit — 12.4% Social Security up to the wage base plus 2.9% Medicare with no ceiling — and income tax applies to the profit less half the self-employment tax, which is deductible. On a typical month at 18% income tax that lands near 31% of profit in total. Set it aside in a separate account the day the money arrives.
When is the tax actually due?
Four times a year, not in April: 15 April, 15 June, 15 September and 15 January for the quarter before each. That is why the set-aside is not savings — it is money you already owe with a due date attached. Paying it out of the operating account when the bill arrives is the single most common way a profitable freelance year ends in debt.
How big should the buffer be?
Three to six months of essential household costs is the working guideline, and the field is editable so you can pick your own. Size it against the length of a realistic drought rather than against a percentage of income: a consultant with three long-running clients needs less than a commission earner whose whole quarter can miss.
Is the buffer the same thing as an emergency fund?
No, and running one pot for both is how people end up with neither. An income buffer smooths a bad month, which is an expected event you have already budgeted for. An emergency fund covers a broken transmission or a hospital bill, which is not. Spend the emergency fund on an ordinary slow month and it was never an emergency fund.
What if my worst month does not cover my essential costs?
Then the page will say so, and that is the finding rather than a formatting problem. Either the floor comes down or the buffer has to be big enough to bridge every run of thin months you can imagine — and the second option is expensive, because it has to be funded from the same surplus that was going to be your savings.
Where does retirement saving fit?
After the buffer, out of the surplus, and in that order deliberately. A solo 401(k) or SEP contribution made from a full buffer is a decision; the same contribution made from an empty one is a loan from next quarter, and the withdrawal that unwinds it costs tax and penalty.