Freelance rate calculator
Work backward from the income you want to the hourly and day rate you must charge.
All amounts and percentages are example inputs, not typical figures — use your own. Taxes are 2026 federal rates; deductions for insurance, retirement contributions and QBI are not applied, so the rate is cautious.
What the number means
Your rate is not the pay you want divided by 2,080 hours. A year has fewer billable hours than a job has paid hours, and a freelancer pays costs that an employer otherwise carries. The calculator starts with the money you want to keep, adds back the taxes, insurance and savings that come out of it, adds the business expenses and a cushion, and spreads the total across the hours you can really invoice. The result is the lowest rate that meets the goal, not the market price of your work.
The method, step by step
1) Find the net profit that leaves your take-home pay after self-employment tax, federal income tax and state tax, and after the health insurance and retirement savings you pay yourself. The page solves this by trial because the taxes depend on the profit. 2) Add business expenses. 3) Add the cushion percentage: revenue = (profit + expenses) × (1 + cushion). 4) Billable hours = (52 − weeks off) × hours per week × billable share; billable days work the same way with days per week. 5) Rate = revenue ÷ billable hours. A second solve finds the W-2 salary that leaves the same take-home pay when the employer covers health insurance, so you can compare the two.
Worked example
Take the form's example: $80,000 take-home, $7,200 health insurance, $6,000 retirement savings, $5,000 of expenses, 4% state tax, five weeks off, 40 hours a week and 60% billable. The profit needed is $135,826. Self-employment tax on it is $19,192, federal income tax $19,029 and state tax $4,405. With expenses and a 10% cushion, the revenue is $154,909. Over 1,128 billable hours that is $137.33 an hour. A salaried job with the same take-home would pay about $115,337, or $55.45 an hour on 2,080 hours.
Common mistakes
The most common error is to assume all working hours are billable. In the example, moving from 60% to 100% billable cuts the rate from $137.33 to $82.40, so the real figure matters more than most inputs. The second is to forget self-employment tax: it is 14.1% of a $100,000 profit, because the 15.3% rate applies to 92.35% of net earnings (IRS, Schedule SE). The third is to leave out the weeks you will not work. Holidays, illness and the gaps between contracts are unpaid for a freelancer.
Limits of this method
Federal tax uses the 2026 tables in the site's tax module and the standard deduction. It does not apply the self-employed health insurance deduction, deductions for retirement plan contributions or the qualified business income deduction, so the real tax may be lower. The Social Security part of self-employment tax stops at the $184,500 wage base for 2026 (SSA), which matters at high incomes. Compared with an employee, the BLS Employer Costs for Employee Compensation survey shows how large an average benefits package is: 30.0% of total compensation in private industry in June 2026, 31.5% for full-time workers. Your own numbers will differ, which is why the page asks for the items instead of using a multiplier.
What hourly rate should a freelancer charge?
It depends on the income you want and how many hours you can actually bill, so the page works backward from your goal. Example values (not recommendations): $80,000 of take-home pay a year, $7,200 for health insurance, $6,000 of retirement savings, $5,000 of business expenses, 4% state tax, 5 weeks off, 40 working hours a week, 60% of them billable and a 10% cushion for late payments. That requires about $135,826 of net profit and $154,909 of invoices, which over 1,128 billable hours is $137.33 an hour, or $1,099 per billable day. If every working hour could be billed, the same year would need $82.40 an hour.
Why is a freelancer's rate so much higher than an employee's hourly wage?
Three reasons. First, a freelancer bills only part of the working time; the rest goes to finding clients, invoicing, admin and learning. Second, a freelancer pays both halves of Social Security and Medicare tax. Third, a freelancer pays for health insurance, retirement savings, equipment and the weeks of unpaid leave that an employer would otherwise fund. In the example, the revenue you must invoice is 1.34 times the W-2 salary ($115,337) that leaves the same take-home pay, even before you count the unbillable hours.
How is self-employment tax calculated?
Self-employment tax is 15.3% of net earnings, made up of 12.4% for Social Security and 2.9% for Medicare (IRS, "Self-employment tax (Social Security and Medicare taxes)"). Schedule SE first multiplies your net profit by 92.35%, so that the tax is levied on the same base an employee's tax would be. The Social Security part stops at the wage base, which is $184,500 for 2026 (SSA). For $100,000 of net profit the base is $92,350, and the tax is $14,129.55. Half of the tax is deducted when figuring income tax, which the calculator also does. An extra 0.9% Medicare tax above $200,000 for a single filer is not included. See the self-employment tax calculator for details.
What does an employer's benefits package actually cost?
The Bureau of Labor Statistics measures it in the Employer Costs for Employee Compensation survey. For June 2026, private industry employers paid $46.89 per hour worked, of which 70.0% was wages and salaries and 30.0% benefits. For full-time workers the figures were $54.00 per hour, 68.5% wages and 31.5% benefits, and legally required benefits (employer payroll taxes, workers' compensation, unemployment insurance) were 7.0% of the cost. This page does not apply a flat multiplier to your rate; it prices each item (taxes, insurance, savings) from the numbers you enter, because your own costs may be higher or lower than the average.
What is a billable-hours percentage and what is realistic?
It is the share of your working time that you can invoice. Proposals, email, bookkeeping, marketing and gaps between projects are real work you cannot bill. The right number is the one from your own time records. The form starts at 60% only as an example. Try 40%, 60% and 80% and watch the effect: for the example above, going from 60% to 100% billable cuts the required rate from $137.33 to $82.40, so low utilization is expensive.
Should the cushion be profit margin?
A sole proprietor's profit is the owner's own pay, which is already the take-home figure plus taxes. The 'cushion' field adds a percentage on top of the required revenue to cover clients who pay late, slow months and unplanned costs. If you run a studio with employees, the margin of the business is a separate question; use the margin calculator and the break-even calculator for that.
What does the calculator leave out?
Deductions that could lower your tax: the self-employed health insurance deduction, contributions to a SEP-IRA or Solo 401(k), and the qualified business income deduction. It also ignores the Additional Medicare Tax, state-specific rules such as business taxes or city taxes, credits and sales tax. Because it leaves these deductions out, the rate is on the cautious side. A tax professional can show the effect of each deduction for your case.
An estimate for planning only — not tax or financial advice. Credits, deductions, local taxes and special cases are not included; your tax return decides. Sources, checked October 27, 2026: SSA, Contribution and Benefit Base (2026: $184,500; self-employed rate 12.4%); IRS, Self-employment tax (Social Security and Medicare taxes) and Schedule SE (Form 1040); BLS, Employer Costs for Employee Compensation, June 2026 (released September 9, 2026). Related: the self-employment tax calculator, quarterly estimated tax calculator, salary calculator, paycheck calculator and margin calculator. How we check our calculators.