Levee setbacks are an intuitive nature-based solution that can improve the flood protection services provided by levees and help rehabilitate levee-stressed ecosystems. Their application in professional practice is in part limited by a lack of guidance on how to size setbacks to balance different interests in floodplain land use. To help address this application barrier, we demonstrate how flood hazard and levee failure risk reduction may be modeled with a numerical hydraulic model of a leveed river in the Midwestern USA, as well as how to calculate scaling relationships between levee failure risk reduction and setback size. Our results suggest setbacks can greatly reduce the severity of flood hazards, for example, by alleviating flow bottlenecks and lowering flood heights. Our results also suggest that improvements in levee reliability scale non-linearly with setback size and exhibit diminishing returns. We conclude with a discussion of design insights and cautions to support the application of setbacks in practice.