Freelance Hourly Rate Calculator

Quoting your old salary divided by 2,080 hours is the fastest way to undercharge as a freelancer. That number ignores self-employment tax, business expenses, and all the hours you work but never bill. This free freelance hourly rate calculator works backward from the life you want: your target salary, your real billable hours, your costs, and your tax rate — and tells you the hourly rate that actually pays for all of it.

How to Use the Freelance Hourly Rate Calculator

Five steps to a rate you can defend:

1. Enter your target annual salary. This is the pay you want freelancing to replace — the number you would accept as an employee salary. Be honest here, not modest; this is the foundation everything else builds on.
2. Enter your billable hours per week. Not the hours you work — the hours clients pay for. A 40-hour week usually contains 25–35 billable hours once you subtract proposals, invoicing, emails, marketing, and learning. New freelancers often overestimate this; 30 is a realistic starting point.
3. Enter weeks off per year. Freelancers have no paid vacation, holidays, or sick days. Four weeks covers two weeks of vacation plus holidays and the odd sick day, and every week off shrinks your billable year — which is exactly why it belongs in the math.
4. Enter annual business expenses. Add up software subscriptions, hardware, website hosting, professional insurance, coworking or home-office costs, accounting, and retirement contributions. Most solo freelancers land between $5,000 and $15,000 a year.
5. Enter your effective tax rate. This is the one people guess worst. It is not your top marginal bracket — it is total tax divided by total income, including the 15.3% self-employment tax on net earnings. For many US freelancers the combined effective rate lands around 22–30%. Check last year's return if you have one, or start with 25%.

Press Calculate My Rate for your hourly rate plus a breakdown showing how much of it is salary, how much is expenses, and how much the taxman takes.

The Formula Explained: Why Your Rate Is Higher Than You Think

The calculator runs on one formula:

Every part exists for a reason. Salary plus expenses is your true revenue target: clients must fund both your paycheck and the cost of running the business. An employee's employer covers the office, software, and equipment; a freelancer's clients have to cover it through the rate.

Dividing by (1 − tax rate) "grosses up" that target. If you need $88,000 after tax and you pay 25% in tax, you cannot bill $88,000 — a quarter of it disappears. You need $88,000 ÷ 0.75 = $117,333 in revenue to keep $88,000. This is the step most freelancers skip, and it is why so many feel busy yet broke.

Dividing by billable hours per year (weekly billable hours × working weeks) spreads that revenue across the only hours that earn. This is where unpaid time off and unbilled admin hours hit: a 40-hour workweek with 30 billable hours and 4 weeks off means 1,440 paying hours, not 2,080. The fewer hours you bill, the more each one must earn.

And here is the part employees never see: you pay both halves of payroll tax. An employee pays 7.65% toward Social Security and Medicare while the employer matches it. A freelancer pays the full 15.3% self-employment tax on net earnings. That extra 7.65% alone is thousands of dollars a year — and it is baked into your tax rate here.

Worked Example

Meet a freelance designer targeting an $80,000 salary. She bills 30 hours a week, takes 4 weeks off, spends $8,000 a year on her business, and faces a 25% effective tax rate:

Her old employee wage was $80,000 ÷ 2,080 = $38.46 an hour. Her real freelance rate is $81.48 — more than double. That is not greed; it is the honest cost of replacing a salary with no benefits, no paid time off, business overhead, and the full 15.3% self-employment tax. If she quoted $50 an hour because it "felt fair," she would keep roughly $49,000 after expenses and taxes — a $31,000 pay cut she would never notice until tax day.

Limitations

This calculator uses one effective tax rate, which blends federal income tax, state tax, and self-employment tax into a single number. In reality, income tax is marginal — your first dollars are taxed lower than your last — so the effective rate is an approximation, not a line from your 1040. For finer detail, run your numbers through a federal income tax estimator.

It also does not model quarterly estimated payments: the IRS expects freelancers to pay tax four times a year, and underpaying triggers penalties. And there is nuance in the self-employment tax itself — the Social Security portion (12.4%) stops at the annual wage base, so very high earners pay a slightly lower effective rate than 15.3%, and you can deduct half of it against income tax.

Finally, math is only the floor. Market rates matter too. If the formula says $81 an hour but comparable freelancers in your niche charge $120, charge $120. If the market will not bear your calculated floor, the honest answer is to cut expenses, bill more hours, or reconsider — not to quietly work for less and hope. This calculator is an educational planning tool, not tax or financial advice; talk to a CPA for your actual situation.

A rate is only real after tax. The federal income tax brackets for 2026 — rates, tables and worked examples — show which bracket a raise or a big project actually lands in, so the hourly number you quote survives April.

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