Freelance Hourly Rate Calculator

Enter the income you want to keep, your yearly business expenses, the share of earnings you set aside for tax, any profit margin, and your time off. The calculator works out the hourly rate needed, or the billable hours needed at a rate you choose.

What you want to keep each year after business expenses, the tax set-aside and the profit margin.
Overhead: software, equipment, insurance, office, health cover you pay yourself.
The default is self-employment tax alone: 15.3% of 92.35% of net profit. Income tax is not included unless its rate is added here.
Revenue kept in the business beyond your pay. Illustrative default.
Weekday holidays and sick days you will not bill.
Hours you can invoice, not hours worked: admin, sales and unpaid revisions are not billable.

Result

$95.69 per hour

Hourly rate

$95.69 / h

Billable hours per year

1,175

Billable hours per working week

25

Working weeks per year

47

Annual revenue needed

$112,434.95

Net earnings (revenue − expenses)

$100,434.95

Tax set-aside

$14,191.46

Profit kept in the business

$11,243.50

How it works

A freelance rate has to pay for more than your time. Every invoice also carries your business expenses, the tax you owe on the profit, and any margin you want to keep in the business. The calculator starts from what you want to take home and works backwards to the revenue that leaves exactly that after those three are paid.

Tax is set aside as a percent of net earnings: revenue minus business expenses. The default, 14.13%, is self-employment tax alone, which is 15.3% (12.4% Social Security plus 2.9% Medicare) on 92.35% of net profit. Income tax is extra; adding the expected income tax rate to this percent gives an approximate set-aside that covers both (approximate because income tax is not charged on the same base or at one flat rate). The profit margin is a percent of revenue that stays in the business on top of your pay.

Billable hours are the hours you can invoice, not the hours you work. The year has 52 weeks; vacation weeks and holiday days (five to a week) come off, and the rest are multiplied by the billable hours you expect each working week. The hourly rate needed is the revenue divided by those hours, rounded up to the next cent. In the other direction, the revenue divided by a rate you choose is the billable hours needed, rounded up to a tenth of an hour.

Formula

working weeks  = 52 − vacation weeks − holiday days ÷ 5
billable hours = working weeks × billable hours per week
revenue R      = (take-home + expenses × (1 − t)) ÷ (1 − t − m)
net earnings   = R − expenses = (take-home + m × expenses) ÷ (1 − t − m)
tax set-aside  = t × net earnings;   profit = m × R
hourly rate    = R ÷ billable hours                (rounded up to the cent)
hours needed   = R ÷ hourly rate                   (rounded up to 0.1 h)
t = tax set-aside %, m = profit margin %

Example

To take home $75,000 with $12,000 of business expenses, the default 14.13% self-employment tax set-aside and a 10% profit margin, revenue must be ($75,000 + $12,000 × 0.8587) ÷ 0.7587 = $112,434.95. That leaves net earnings of $100,434.95, a tax set-aside of $14,191.46 and a profit of $11,243.50, so $75,000 is left to take home.

With 3 weeks of vacation and 10 holidays there are 47 working weeks; at 25 billable hours a week that is 1,175 hours, so the rate needed is $95.69 an hour. At $100 an hour the same target needs 1,124.4 billable hours, or 23.9 a week.

Assumptions and limitations

  • Results are for informational and educational purposes and are not financial, tax or legal advice.
  • The default tax set-aside covers federal self-employment tax only, at the full 15.3% (Schedule SE). Social Security tax stops at the wage base ($184,500 of net earnings from self-employment for 2026, about $199,783 of net profit), so above that the default overstates it; the 0.9% Additional Medicare Tax, federal and state income tax and the deduction for half of self-employment tax are not modelled.
  • The tax set-aside and profit margin are flat percents you choose; the profit margin default is illustrative.
  • Every working week is assumed to bill the same hours, and every billed hour is paid. Late payments, bad debts and unbilled scope creep lower the effective rate.
  • Holidays are counted as weekdays in five-day weeks.

Frequently asked questions

Why is the rate so much higher than salary divided by 2,080 hours?

An employee's salary is spread over 2,080 paid hours (40 hours × 52 weeks) including paid holidays, and the employer pays half of Social Security and Medicare and the overhead. A freelancer pays all of the self-employment tax, pays their own expenses and is paid only for billable hours, which are usually far fewer than hours worked. With the example's figures, $75,000 over 2,080 hours is $36.06 an hour; the freelance rate that takes home the same amount is $95.69.

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