CalculateY
Quick Answer
A freelancer wanting $80,000 take-home income with $10,000 in expenses, a 30% tax rate, and 25 billable hours per week over 48 weeks needs to charge approximately $107.14 per hour.
Software, equipment, insurance, etc.
Common Examples
| Input | Result |
|---|---|
| $80,000 income, $10,000 expenses, 25 hrs/wk, 48 wks, 30% tax | ~$107.14/hr, ~$857.14/day, ~$2,678.57/wk |
| $60,000 income, $5,000 expenses, 30 hrs/wk, 50 wks, 25% tax | ~$57.78/hr, ~$462.22/day, ~$1,733.33/wk |
| $120,000 income, $20,000 expenses, 20 hrs/wk, 46 wks, 35% tax | ~$234.19/hr, ~$1,873.50/day, ~$4,683.76/wk |
| $50,000 income, $3,000 expenses, 35 hrs/wk, 50 wks, 22% tax | ~$38.82/hr, ~$310.56/day, ~$1,358.70/wk |
| $100,000 income, $15,000 expenses, 25 hrs/wk, 48 wks, 28% tax | ~$133.10/hr, ~$1,064.81/day, ~$3,327.55/wk |
How It Works
This calculator uses the freelance rate formula that accounts for income goals, business expenses, and tax obligations:
Total Annual Revenue Needed = (Desired Income + Business Expenses) / (1 - Tax Rate / 100)
Annual Billable Hours = Billable Hours per Week x Working Weeks per Year
Hourly Rate = Total Annual Revenue Needed / Annual Billable Hours
Where:
- Desired Income = the annual take-home income after taxes and expenses
- Business Expenses = annual costs of running the freelance business (software, equipment, insurance, office space, professional development)
- Tax Rate = estimated combined tax rate including self-employment tax, federal income tax, and state/local taxes
- Billable Hours per Week = hours actually billed to clients (not total hours worked)
- Working Weeks per Year = weeks of active work, accounting for vacation, holidays, and sick time
Billable vs. Total Hours
A common mistake is dividing by total hours worked rather than billable hours. Freelancers typically spend significant time on non-billable activities: marketing, invoicing, administrative tasks, client communication, and professional development. Industry surveys suggest that most freelancers bill only 60% to 70% of their total working hours. For a 40-hour work week, that translates to approximately 24 to 28 billable hours.
Self-Employment Tax Consideration
Freelancers in the United States pay self-employment tax (Social Security and Medicare) in addition to federal and state income tax. The self-employment tax rate is 15.3% on net earnings (12.4% Social Security up to the wage base, plus 2.9% Medicare). Combined with income tax, effective rates for freelancers commonly range from 25% to 40% depending on income level and location.
Additional derived rates:
- Daily Rate = Hourly Rate x 8 (standard day)
- Weekly Rate = Hourly Rate x Billable Hours per Week
- Monthly Rate = Total Annual Revenue Needed / 12
Worked Example
A freelance designer wants $80,000 in annual take-home pay. Business expenses (software subscriptions, equipment, liability insurance) total $10,000/year. The estimated combined tax rate is 30%. Billable client work averages 25 hours per week, and the designer plans to work 48 weeks per year (accounting for 4 weeks of vacation/holidays). Total revenue needed = ($80,000 + $10,000) / (1 - 0.30) = $90,000 / 0.70 = $128,571. Annual billable hours = 25 x 48 = 1,200 hours. Hourly rate = $128,571 / 1,200 = $107.14. Daily rate (8 hours) = $857.14. Weekly rate = $107.14 x 25 = $2,678.57. Monthly rate = $128,571 / 12 = $10,714.