Freelance hourly rate calculator

Start from the money you want to keep. This freelance hourly rate calculator works backward to the gross rate you have to charge — with self-employment tax computed the way the IRS actually charges it, not a round-number markup.

How the math works

The rate is a chain, run in reverse. You name the money you want to keep; the calculator adds back every dollar the tax code and your billable-hour count remove.

The hard part is "net profit needed." Self-employment tax is not a flat percentage of what you bill. It is 15.3% — 12.4% for Social Security and 2.9% for Medicare — but charged on only 92.35% of your net profit, not the whole figure. And the Social Security half stops once your taxed earnings pass the $168,600 wage base. Above that line, each extra dollar of profit is hit for the 2.9% Medicare rate alone.

So the calculator solves for the profit whose take-home equals your target, then divides the revenue that produces — profit plus your expenses — across your billable hours. If you enter an income tax rate, it applies that rate to your profit minus one-half of the self-employment tax, because that half is an above-the-line deduction. Most "add 30% for taxes" tools skip that deduction and quietly charge you twice.

Worked example

Take a freelancer who wants $59,540 a year in hand after self-employment tax — the U.S. median individual earnings for a full-time worker, used here as a concrete target. Income tax is set aside for the moment.

To keep $59,540, the business has to clear $69,337 in net profit. Self-employment tax on that profit is $9,797: the 15.3% rate applied to $64,033, which is 92.35% of the profit. That gap between profit and take-home is the whole reason a freelance rate has to sit above the equivalent salary.

Now the hours. A standard work year is 2,080 hours. Strip out the private-industry averages of 10 vacation days and 8 paid holidays and you have 1,936 hours. Bill every one of them and the rate is $35.81 an hour. Bill half of them — the honest number for most solo freelancers once sales, admin, and invoicing eat the rest — and the same take-home needs $71.63 an hour. Halve the billable hours and the rate doubles. That single input moves the answer more than the tax math does.

When this calculator is wrong

The rate it prints is a floor, and it leans on assumptions worth checking before you quote anyone.

• Billable hours are the input people get wrong. Entering 2,080, or your total working hours, assumes you invoice every hour you sit down. You don't. Prospecting, contracts, bookkeeping, and the gaps between projects are unpaid. Guess billable hours too high and the rate comes out too low — which is the most common way freelancers underprice.
• Income tax is a flat rate here, and the real thing isn't. Set a rate and the calculator applies it to profit minus the half-SE-tax deduction, but it ignores the standard deduction, the qualified business income deduction, and the progressive bracket structure. Treat the income-tax figure as a rough overlay, not a filing.
• It assumes no employer benefits. A salaried job bundles health insurance, a retirement match, and paid leave into that number. A freelance rate has to fund all of it out of the same revenue, so matching your old salary's take-home is not the same as matching the job.
• The wage base and rates are the current figures. The $168,600 Social Security cap rises most years, and the calculator uses one point in time. Above the cap the rate math changes; below it, it doesn't.

What to do with the result

Treat the number as the rate that keeps you whole, then price above it. If the calculator says $71.63 covers your target at your real billable hours, quoting $72 only breaks even against your goal — it leaves nothing for a slow quarter, a client who pays late, or a raise. The practical move is to size the rate here, then add a margin for the risk a salaried worker never carries.

If the rate comes out higher than your market will pay, the fix is rarely the rate. It's the billable-hour count or the expense line. Winning back unbilled hours lowers the rate you need faster than trimming costs does, because hours sit in the denominator.

Common questions

How much more than my salary should I charge as a freelancer?

There is no fixed multiplier. The common "add 25–50%" rule of thumb is a guess at self-employment tax, lost benefits, and unbilled time rolled together. This calculator separates them: it charges self-employment tax exactly, and it makes billable hours and expenses your own inputs, so the markup falls out of your numbers instead of a rule.

Why is self-employment tax 15.3% when payroll tax felt like half that?

An employee pays 7.65% and the employer pays a matching 7.65%. A freelancer is both, so they pay the full 15.3%. The one offset: it applies to 92.35% of profit rather than the whole amount, and half of it is deductible against income tax.

What should I put for billable hours?

Hours you can actually invoice, not hours you work. A full-time freelancer who works 40-hour weeks often bills closer to 20–25 of them once sales, admin, and downtime are removed. If you don't have a track record yet, model a low number and raise it as you learn your real ratio.

Does the rate change once I earn a lot?

Yes, slightly. Once your taxed earnings pass the $168,600 Social Security wage base, the 12.4% portion stops and only the 2.9% Medicare rate continues. Each dollar of profit above that line costs less in self-employment tax, so a very high target take-home needs a proportionally smaller gross-up.

Should I include income tax in the target?

You can, using the income tax field, but keep it rough. The field applies a flat rate after the half-SE-tax deduction and skips the standard deduction and bracket structure. For a real quarterly-tax number, size income tax separately.