Freelance Hourly Rate Calculator
Built & reviewed by Nandu Kannan · Overtime rules cited to primary statutes
What should you charge? Enter the income you want to keep, your realistic billable hours and a tax buffer — get the minimum hourly and day rate that actually covers taxes, costs and time off.
Estimates for planning only — not tax advice. Actual self-employment and income tax depend on your filing situation.
The formula
Revenue needed = take-home ÷ (1 − tax%) + business costs
Hourly rate = revenue needed ÷ (billable hrs/week × working weeks)
The trap is the denominator: a freelancer working 40-hour weeks typically
bills only 25–28 of them. Pricing against 2,080 employee
hours is how freelancers end up earning less than a salary.
Hitting those billable hours starts with measuring them — if you are not logging time yet, see our comparison of the best time-tracking apps for freelancers (several are free).
Frequently asked questions
How do I set my freelance hourly rate?
Work backwards from the income you want to keep. Gross your take-home target up for taxes, add annual business costs, then divide by your real billable hours per year (billable hours/week × working weeks). That is your minimum rate — charge more if the market allows. Example: $80,000 take-home at a 30% tax buffer plus $5,000 costs is about $119,300 of revenue; at 25 billable hours over 48 weeks (1,200 hours) that is roughly $99/hour.
Why should freelancers charge more than an employee hourly rate?
An employee at $40/hour gets 2,080 paid hours, employer-paid payroll tax, benefits and paid time off. A freelancer bills maybe 1,200 hours a year, pays both halves of Social Security and Medicare (15.3% self-employment tax), buys their own insurance and software, and absorbs unpaid admin, sales and vacation time. Doubling the equivalent employee hourly rate is a common, defensible starting point.
What utilization rate is realistic for a freelancer?
Around 60–70% of working time is a realistic ceiling. Of a 40-hour week, expect roughly 24–28 billable hours once you subtract marketing, proposals, invoicing, email and unpaid gaps between projects. New freelancers often run closer to 50%. Pricing as if you will bill 40 hours every week is the most common way to undercharge.
How much should I set aside for taxes as a 1099 contractor?
A buffer of 25–30% of profit covers most US freelancers: 15.3% self-employment tax plus federal (and often state) income tax, partly offset by deductions like the QBI deduction and half of self-employment tax. Set it aside as you get paid and remit quarterly estimated taxes. Higher earners or high-tax states may need 35%+.
Should I charge a day rate or an hourly rate?
A day rate (commonly hourly × 8) suits focused engagements — workshops, design sprints, on-site days — and stops scope-nibbling by the hour. Hourly suits open-ended or unpredictable work. Many freelancers eventually move to project or value-based pricing, but both are anchored on knowing your minimum hourly rate first.
Is the calculated rate before or after taxes?
The rate you get is what you must invoice (gross). The take-home figure you entered is what is left after the tax buffer and business costs. If clients reimburse expenses separately, lower the business-costs input and your required rate drops.
Related tools
Billable Hours Calculator · Invoice Generator · 1099 Tax Calculator · Salary to Hourly