Quick answer
The best place for money you owe the IRS is an insured, fee-free high-yield savings account that lets you separate tax money from everything else.
- For built-in buckets: Ally (up to 30 Buckets) or SoFi (up to 20 Vaults).
- For separate numbered accounts: Capital One 360 Performance Savings, where you can open several savings accounts under one login.
- For simple, no-minimum savings: Marcus by Goldman Sachs.
- For the highest advertised rates: accounts such as Axos and E*TRADE Premium Savings have led rate tables recently, but some rates need conditions or are promotional.
Rates change often. As of September 28, 2026, NerdWallet listed top high-yield savings APYs between about 3.10% and 4.25%.
What to look for in a tax savings account
- Deposit insurance: FDIC for banks, NCUA for credit unions, up to $250,000 per depositor, per institution, per ownership category.
- No monthly fees and no minimum balance.
- Buckets or multiple accounts, so tax money can’t get mixed up with savings goals.
- Fast transfers to your checking account before each estimated tax deadline.
- A competitive APY without hoops. Check if the top rate needs direct deposit, a minimum balance or is a limited-time promotion.
- Easy links to your business checking account.
Accounts compared
APYs below are those NerdWallet reported as of September 28, 2026. Where no rate is shown, we didn’t verify a current rate. Check each bank for current rates and terms before opening an account.
| Account | APY (Sept. 28, 2026) | Minimum | Tax-money feature | Watch out for |
|---|---|---|---|---|
| SoFi Checking and Savings | Up to 4.20% | $0 | Up to 20 Vaults | Top rate may require qualifying deposits |
| Ally Savings | Check Ally | Not verified | Up to 30 named Buckets, plus automated savings tools | Buckets share one rate and one account number |
| Capital One 360 Performance Savings | 3.10% | $0 | Open multiple savings accounts | Lower rate than some online banks |
| Marcus by Goldman Sachs | 3.50% | $0 | Simple, no-fee savings | Fewer organizing tools |
| Axos Bank | 4.21% | Conditions apply | High rate | Rate reported with balance and direct deposit requirements |
| E*TRADE Premium Savings | 4.25% | $0 | High rate | Reported as a 6-month promotional rate |
| Wealthfront Cash Account | Check Wealthfront | Not verified | Categories within one account | Not a bank; uses partner banks for FDIC coverage |
Short reviews
SoFi
SoFi combines checking and savings. Vaults let you create separate pots, such as “Q4 estimated tax” and “Emergency fund.” The advertised top APY may depend on meeting deposit conditions, so read the fine print.
Ally
Ally’s Buckets let you split one savings account into up to 30 labeled pots. It’s a good fit if you like seeing “Taxes” as its own balance. Buckets don’t add deposit insurance or earn a different rate.
Capital One 360
Instead of buckets, you can open separate savings accounts with their own account numbers. That’s useful if you want tax money truly apart, or to set automatic transfers from checking.
Marcus by Goldman Sachs
A straightforward online savings account with no fees and no minimum. It suits freelancers who just want one separate, interest-bearing tax account.
Axos and E*TRADE
Both showed some of the highest rates as of late September 2026. Axos’s reported rate has balance and deposit conditions. E*TRADE’s was listed as promotional. After a promo ends, the rate can drop.
Wealthfront
Wealthfront’s Cash Account offers categories and uses a sweep to partner banks, which it says extends FDIC coverage beyond $250,000. It’s not a bank itself. Understand how the sweep works before depositing large sums.
Worked example: what the interest is worth
Taylor, a freelance consultant, keeps an average of $20,000 in tax savings through the year.
| Account | APY | Interest for one year |
|---|---|---|
| Checking at 0.01% | 0.01% | $2 |
| Savings at 3.50% | 3.50% | $700 |
| Savings at 4.00% | 4.00% | $800 |
At 4.00%, Taylor earns about $800. Interest is taxable income. In the 22% bracket, about $176 goes to federal income tax, leaving $624.
Rates in the table are simplified illustrations. Actual interest depends on your balance through the year and rate changes.
How to set up your tax account
- Open the account in your name or your business’s name. A business savings account works well if you already use separate business and personal finances.
- Pick a percentage of each payment to save. See How Much Should I Set Aside for Taxes as a 1099 Contractor?
- Transfer every time a client pays, or set a weekly automatic transfer.
- Pay quarterly from this account on the IRS deadlines. See Quarterly Estimated Taxes and How to Pay Estimated Taxes Online.
- Report the interest. Banks send Form 1099-INT if you earned $10 or more.
Business vs personal savings
A personal high-yield account is fine for most sole proprietors. Tax payments come out of your personal funds anyway, since estimated taxes are paid on your individual return.
A business savings account can make sense if you run an LLC or S corp, or if you want every business dollar in one place. Business savings rates are often lower than the best personal accounts, so compare before choosing.
Whichever you choose, give the account a clear name, such as “IRS 2026,” and don’t link a debit card to it. The fewer ways money can leave, the less likely you are to spend it before the deadline.
Frequently asked questions
Is a high-yield savings account safe for tax money?
Yes, if the bank is FDIC-insured or the credit union is NCUA-insured, and you stay within insurance limits.
Should I put tax money in CDs or Treasury bills?
Only if the maturity lines up with your tax deadlines. Early withdrawals can cost you penalties or price losses.
Can I pay the IRS directly from savings?
Many savings accounts work with IRS Direct Pay, but some limit withdrawals or electronic debits. Transferring to checking first is often simpler.
Is interest on tax savings business income?
No. For a sole proprietor, interest on savings is personal interest income, reported on your Form 1040, not on Schedule C.
This article is general information, not financial or tax advice. Prices and rates change often. Check each bank for current terms.
Related guides
- Retirement Plans for Self-Employed: SEP IRA vs Solo 401(k) vs SIMPLE IRA
- Solo 401(k) Contribution Limits 2026 and How to Maximize Them
- SEP IRA Explained: Contribution Limits and Deadlines
- Best Solo 401(k) Providers for Freelancers
About this guide
Written by the Freelancer Tax HQ editorial team, based on our professional experience, official US government sources (IRS, SSA and other agencies) and reputable informational articles listed in the sources below. Last reviewed on . Tax rules change often, and we update this guide when they do. Read our editorial policy or report an error.
Sources
NerdWallet: Best high-yield online savings accounts (September 2026); SwitchWize: Best high-yield savings with buckets 2026; FDIC: Understanding deposit insurance; IRS: About Form 1099-INT. Example figures are FreelancerTaxHQ illustrations.
Official resources linked in this guide: IRS: Estimated Taxes; IRS Direct Pay.