Freelance Hourly Rate Calculator
↻ Updated 2026Work backwards from the income you want to keep to the hourly rate you need to charge — factoring in taxes, business expenses and the billable hours you can realistically sell.
Educational calculators — always consult a licensed professional before making financial decisions.
Runs entirely in your browser — nothing you enter is sent to us.How this works
How to read your required hourly rate
$93.89 an hour to take home $80,000 — nearly two and a half times what a salaried employee on $80,000 earns per hour. That gap isn't greed, it's arithmetic: 1,200 billable hours has to carry a whole year, and tax and expenses come out of every dollar you bill.
How to work backwards from the income you want to the rate you charge
Three steps, running in the opposite direction to how people usually think about rates. Start from what you want to keep, gross it up for tax, add what the business costs to run, then divide by the hours you can actually sell.
The gross-up is the step that surprises people. To keep $80,000 after a 25% tax rate you need $106,666.67 of profit — not $100,000 — because the tax is charged on the larger number, not on what's left. It's the same arithmetic a payroll gross-up uses, applied to your own income.
billable hours = billable hours per week × working weeks profit needed = desired take-home ÷ (1 − tax rate) revenue needed = profit needed + business expenses required rate = revenue needed ÷ billable hours tax to set aside = profit needed − desired take-home
- desired take-home
- What you want to keep after tax, for the year — the whole calculation runs backwards from this — it is the only number you get to choose freely
- tax rate
- A single blended rate for federal income tax and self-employment tax — the default is 25%; SE tax alone accounts for roughly 14.1% of profit, leaving about 11 points for income tax
- business expenses
- Annual cost of running the business — software, hardware, insurance, accounting — deductible, so they're added after the gross-up rather than taxed
- billable hours per week
- Hours you can actually invoice — not hours you work — the default of 25 is deliberately not 40; proposals, invoicing, marketing and admin are not billable
- working weeks
- Weeks you work in a year, after holidays and time off — 48 on the defaults — nobody pays a freelancer to take a holiday
- required rate
- Revenue needed ÷ billable hours — the floor for your rate at these assumptions, not a market price
The two divisions do very different work. Dividing by (1 − tax rate) recovers tax; dividing by billable hours spreads the whole year's requirement across the hours you can sell. The second is far more powerful, because the first is bounded — a tax rate can't exceed 100% — while billable hours can be almost anything, and most freelancers overestimate them badly.
The model gets one detail right that rough calculations usually don't: the $6,000 is added after the gross-up, not before. Deductible expenses come out of revenue before profit is taxed, so bill $112,666.67, spend $6,000, and the $106,666.67 left is what the 25% is charged on. For the reverse comparison — what an employee's salary works out to per hour — the salary to hourly calculator uses a 2,080-hour year.
Worked examples
Example: $80,000 take-home on 25 billable hours a week
The calculator's defaults — a full-time freelancer selling 25 hours a week across 48 working weeks, with $6,000 of annual business costs and a 25% blended tax rate.
| Desired take-homewhat you keep | $80,000 |
| Profit needed (÷ 0.75)grossed up for 25% tax | $106,666.67 |
| Tax to set aside$106,666.67 − $80,000 | $26,666.67 |
| Plus business expensesdeductible, so added after the gross-up | + $6,000 |
| Revenue you must billthe number clients actually pay you | $112,666.67 |
| Billable hours per year25 hrs × 48 weeks | 1,200 |
| Required hourly rate$112,666.67 ÷ 1,200 | $93.89 |
$93.89 an hour. That looks extravagant until you follow the money: of every hour billed, $66.67 is yours, $22.22 is tax and $5.00 is expenses. The rate is high because it's doing the work of a salary, a payroll tax contribution, an equipment budget and a paid holiday scheme at once — and only gets 1,200 hours a year to do it in.
Example: what happens if you could bill 40 hours a week
Same income target, same expenses, same tax rate. Move billable hours from 25 to 40 — the hypothetical where every working hour is a paid hour.
| Billable hours per weekup from 25 | 40 |
| Billable hours per year40 × 48 | 1,920 |
| Revenue you must billunchanged — the target didn't move | $112,666.67 |
| Required hourly ratedown from $93.89 | $58.68 |
| Changea 37% lower rate for identical income | − $35.21/hr |
The rate falls by 37% without your income changing by a cent. This is the most important thing on the page, and it runs in the direction people find uncomfortable: the reason freelance rates look high is mostly that freelance hours are scarce, not that freelancers are expensive. Billing 40 hours a week is also fiction for nearly everyone — someone has to write the proposals, chase the invoices and find the next client, and none of those hours have a line on anyone's bill.
Frequently asked questions
How much should a freelancer charge per hour?
There's no rate this page will hand you, but there is a floor, and it's what this calculator computes: the rate below which your target income doesn't happen. On the defaults — $80,000 take-home, $6,000 of expenses, 1,200 billable hours, 25% blended tax — that floor is $93.89.
The floor and the market are different questions. Published US freelance averages sit near the high $40s an hour across all fields, with wide variation by discipline: writers cluster in the $30–60 range, developers and specialist consultants well above it. If your floor is above what your market pays, the calculator has told you something useful — either the income target, the hours or the discipline has to move.
How much more should a contractor charge than a salaried employee?
The commonly cited multipliers are 1.5× to 2× the equivalent employee hourly rate, and this calculator shows why the range is that wide. An $80,000 salaried employee earns $38.46 an hour across a 2,080-hour year. The default here needs $93.89 — about 2.4× — because it's targeting $80,000 *after* tax on only 1,200 billable hours.
Three things drive the gap. Self-employment tax is 15.3% rather than the employee's 7.65%, because there's no employer paying the other half. Benefits — health premiums, a retirement match, paid leave — are worth 20–30% of a salary and a contractor funds all of them from the rate. And billable hours are a fraction of worked hours, while a salary pays for every hour including the unproductive ones. A 25–40% premium roughly breaks even on taxes and benefits alone; the rest of the multiplier is the hours.
How many billable hours a week is realistic for a freelancer?
20 to 30 is the range most sustainable freelance businesses actually hit, which is why this calculator defaults to 25 rather than 40. Across 48 working weeks that's roughly 1,000 to 1,400 billable hours a year — the default's 1,200 sits in the middle.
The gap between worked and billable is where freelance businesses are won and lost. Proposals, invoicing, client email, marketing, bookkeeping and professional development are all real work and none of them are billable. Utilisation rates below about 60% tend to signal a pricing or pipeline problem; above 80% tends to signal that business development has stopped, which is a problem that arrives later. Setting this field to 40 doesn't make you more productive — it makes your rate 37% too low.
Do freelancers have to pay quarterly estimated taxes?
If you expect to owe $1,000 or more in federal tax for the year after withholding and credits, the IRS expects payment as you go, in four instalments rather than a lump at filing. On the defaults, the $26,666.67 this page tells you to set aside is roughly $6,667 a quarter — nobody is withholding it for you.
The dates are mid-April, mid-June, mid-September and mid-January. Missing them triggers an underpayment penalty even if you pay in full at filing, though the safe-harbour rules protect you: pay 90% of the current year's liability or 100% of last year's total (110% if your AGI was over $150,000) and the penalty doesn't apply. The quarterly tax calculator splits the figure four ways properly.
What this rate calculator leaves for you to work out
It computes a floor from your assumptions. Two of those assumptions are doing a lot of quiet work, and the biggest thing missing isn't in the formula at all.
- The tax rate is one blended guess — Federal income tax and self-employment tax are collapsed into a single percentage. SE tax alone is 15.3% on 92.35% of profit — about 14.1% — which at the 25% default leaves only 11 points for income tax. That's plausible at low profit and optimistic higher up, where brackets rise while SE tax flattens above the $184,500 Social Security wage base.
- No state tax, and no QBI deduction — The blended rate is federal in spirit. A state income tax pushes the real rate — and therefore the required rate — up; the §199A qualified business income deduction can push it down by removing up to a fifth of qualifying business income from taxable income. Neither has a field here.
- Benefits you'd have had as an employee aren't in expenses — Health insurance, retirement contributions and any disability cover are not in the $6,000 default unless you put them there — and they are typically the largest costs a freelancer absorbs. Health premiums alone can exceed the entire default expense figure.
- It assumes you sell every billable hour — 1,200 billable hours is a capacity figure, not a forecast. It assumes the pipeline is full for 48 straight weeks with no gap between contracts, no client who ghosts and no invoice paid ninety days late. Real utilisation is lumpy, and the rate that only works at full capacity doesn't work.
- It computes a floor, not a price — Nothing here knows what your clients will pay. The output is the rate your own assumptions require; whether the market meets it is a separate question, and the calculator will happily return a number nobody in your field charges.
- ·IRS Schedule SE — Self-Employment Tax
- ·U.S. Dept. of Labor — Fair Labor Standards Act — 40-hour workweek — the basis for a 2,080-hour full-time year
Rates, brackets and limits here are checked against primary sources. If a number still looks off, email support@realmoneyiq.com and we'll review and fix it.
RealMoneyIQ provides free educational calculators, not financial, tax, investment or legal advice. Results are estimates based on the assumptions you enter and publicly published rates; your actual outcome will differ. Always confirm decisions with a licensed professional who knows your full situation.