Why 30% is the wrong answer
Thirty percent is the number everybody repeats, and it is wrong for most people in one direction or the other.
It is too high for somebody in their first year with modest profit, a standard deduction absorbing much of it, and a state with no income tax. Over-reserving is not free: it is a cash-flow cost paid all year for a refund later.
It is too low for somebody with a good year, a working spouse pushing the household into higher brackets, and a state that taxes income at 9%. The gap is discovered in April, which is the worst time to discover it.
What actually drives it
Four things, and none of them is your revenue.
- Net profit, not revenue. Deductions come off before any tax is computed.
- Wages in the household, which fill the low brackets and the Social Security wage base first.
- Filing status and whether anyone else is already withholding.
- Your state, which ranges from nothing at all to roughly a tenth of income.
A reserve is a balance, not a rate
The useful question is not "what percentage" but "is the money there". Those are different questions and only the second one has a consequence.
Owed-so-far against reserve-held is a balance you can check. A percentage is a guess you applied months ago and have not revisited, and it silently stops being right the moment anything changes.
The practical version: keep the tax money in a separate account, compare what you owe so far against what that account holds, and adjust the share you are setting aside when the two drift apart.
What is left is what you can actually pay yourself
Once a reserve exists, the balance in the business account stops being the interesting number. What matters is what remains after the reserve is whole and after the charges you already know are coming.
That figure is usually a good deal smaller than the balance, and it is the one that should drive what you move to personal.