Work and taxes
Freelance Rate Calculator
The income you want each year, turned into an hourly rate
With this freelance rate calculator you turn the income you want to take home each year into the rate you need to charge per billable hour, after expenses, taxes and time off.
The key idea
Your rate is not your income divided by 52 weeks: it is much more
To take home $75,000 with $6,000 of expenses and 25% set aside for taxes, you need to bill $106,000 a year. With 40 hours a week, 15 days off, 10 holidays and 75% of your time billable, that is about 1,415 billable hours: $74.89 an hour. Dividing by 52 full weeks would give $50.79.
How it is calculated
A year has about 261 weekdays. Subtract your days off and the holidays you will not work to get the days you actually work. Then keep only the share of your hours you can bill to clients.
Revenue needed = expenses + take-home income / (1 − tax share)
Hourly rate = revenue needed / (working days × hours per day × billable share)
Taxes are applied to your profit (revenue minus expenses). As a self-employed worker you usually owe self-employment tax for Social Security and Medicare on top of income tax: see IRS Topic 554. We do not compute those taxes; enter the share you set aside, or ask a tax professional.
Worked example
You want to take home $75,000 a year, with $6,000 of expenses and 25% of your profit set aside for taxes: revenue needed 6,000 + 75,000 / 0.75 = $106,000. With 40 hours a week, 15 days off and 10 holidays you work about 236 days; at 75% billable that is about 1,415 hours. Your rate: $74.89 an hour.
Official sources
Typical cases
Freelance hourly rate by the salary you want
The hourly rate to charge to take home a salary like an employee, with $6,000 in yearly expenses, 25% set aside for taxes, 75% billable hours, 15 vacation days and 10 holidays.
| Salary you want | Hourly rate | Day rate | Monthly revenue |
|---|---|---|---|
| $40,000 | $41.92 | $251.53 | $4,944.44 |
| $50,000 | $51.34 | $308.05 | $6,055.56 |
| $60,000 | $60.76 | $364.57 | $7,166.67 |
| $75,000 | $74.89 | $449.36 | $8,833.33 |
| $90,000 | $89.02 | $534.14 | $10,500.00 |
| $100,000 | $98.44 | $590.66 | $11,611.11 |
| $120,000 | $117.28 | $703.71 | $13,833.33 |
| $150,000 | $145.55 | $873.28 | $17,166.67 |
Save or share this table as an image Common questions
Frequently asked questions
How do I calculate my freelance hourly rate?
Divide the revenue you need by the hours you can actually bill. That revenue is your take-home goal plus expenses and taxes; the hours are your working days times your daily hours times your billable share.
How much should I charge to make $75,000 a year?
About $75 an hour, with $6,000 of expenses, 25% set aside for taxes, 40 hours a week, 25 days off and 75% of your time billable. Dividing by 52 full weeks would give about $51, which is too low.
What share of my hours is billable?
Only you can measure it, but it is rarely 100%. Finding clients, writing proposals, invoicing and email are work you usually cannot bill. Track a few weeks and enter the real share.
What taxes do freelancers pay?
Income tax and, usually, self-employment tax for Social Security and Medicare. IRS Topic 554 explains self-employment tax. This calculator uses the share you enter; it does not work out the tax for you.
What counts as a business expense?
What you pay to run your business: equipment, software, internet, a coworking space, professional fees and health insurance you buy yourself. Nobody else covers them, so add them to the revenue you need.
Can I use it if I am an employee?
Yes, to compare: set expenses and taxes to 0, the billable share to 100% and enter your gross salary. You will see what you earn per hour actually worked. The hourly to salary calculator does the reverse.
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