How this is calculated
- Billable hours per year. The weeks you actually work times your billable
hours, minus your non-billable time:
(52 − weeks off) × billable hrs/wk × (1 − non-billable %). This is the number most rate math gets wrong — 40 hours a week for 52 weeks is 2,080 hours, but almost nobody bills all of them once vacation, holidays, sick days, admin, invoicing, and finding the next client come out. - What you need to earn. We add up your target take-home, business
expenses, health insurance, and retirement. Retirement is taken as your chosen percentage
of take-home:
retirement = take-home × retirement %. - Gross revenue needed. Those needs are pre-tax, so we gross them up by
your tax buffer:
gross = (take-home + expenses + health + retirement) ÷ (1 − tax %). The difference between gross and needs is your tax set-aside. - Required hourly rate.
rate = gross revenue needed ÷ billable hours per year. The day rate israte × 8, and the project estimate israte × project hours. The headline rate is rounded to the nearest dollar; the exact figure is shown beneath it. - Reality check vs. a W-2 salary. A salaried employee taking home the same
amount over a standard 2,080-hour year keeps
take-home ÷ 2,080per paid hour. Your billed rate runs well above that — not as profit, but because it also funds the extra 7.65% employer half of Social Security and Medicare you now pay yourself (self-employment tax is 15.3% total: 12.4% Social Security up to the 2026 wage base of $184,500, plus 2.9% uncapped Medicare), your own health insurance, retirement, business expenses, and every unpaid hour.
What this doesn't do: it doesn't compute your exact self-employment or income tax — that depends on your deductions, filing status, state, and the qualified business income deduction, so the tax buffer stands in for all of it. It doesn't model the deductible half of self-employment tax, quarterly estimated payments, or client-by-client rate variation. It's a planning estimate to anchor your pricing, not a tax return. Rates and thresholds referenced (2026 FICA wage base, self-employment tax rate) are current as of July 2026.
Related: after you've set a rate, put it on paper with the freelance invoice generator, size your tax bill with the self-employment tax calculator, and plan your payments with the quarterly estimated tax calculator.
Frequently asked questions
How much should a freelancer charge per hour?
Work backward from what you need to take home, not from what a job paid you. Add your target take-home pay, business expenses, health insurance, and retirement savings, then gross that up for self-employment and income tax. Divide by the hours you can actually bill in a year — which is far fewer than 40 × 52, because of unpaid time off and non-billable admin, sales, and email time. For most independent professionals the honest number lands well above their old salaried hourly rate.
Why is a 1099 hourly rate higher than a W-2 salary hourly rate?
As a 1099 contractor you pay both halves of Social Security and Medicare — the 15.3% self-employment tax, versus the 7.65% a W-2 employee pays while the employer covers the other 7.65%. You also buy your own health insurance, fund your own retirement, get no paid vacation, holidays, or sick days, and spend unpaid hours on admin and finding work. Your billed rate has to cover all of that, so a rate that looks high compared with a salary usually is not once those costs come out.
What tax buffer percentage should I use?
A common planning range is 25% to 35% of gross self-employed income set aside for taxes. Self-employment tax alone is 15.3% (12.4% Social Security up to the 2026 wage base of $184,500, plus 2.9% Medicare with no cap), and federal plus any state income tax stacks on top. The right number depends on your income, state, deductions, and the qualified business income deduction, so treat the default here as a starting estimate and confirm with a tax professional.
Does this calculator include self-employment tax?
Yes, through the tax buffer percentage. Rather than compute exact self-employment and income tax — which depends on your deductions, filing status, and state — the tool grosses your required income up by the buffer you set, so the buffer covers both self-employment tax and income tax together. It is a planning estimate, not a tax return, and it does not itself model the deductible half of self-employment tax or the qualified business income deduction.
Estimates only — not financial or tax advice. This calculator is an educational planning tool, not a substitute for a licensed tax professional, accountant, or your own analysis of your market and client base. It does not compute exact self-employment or income tax, model deductions or credits, or guarantee that any rate is achievable in your market. No liability is accepted for decisions made from these results.