How this is calculated
This tool sets the rate you must charge to actually keep the take-home you want — working backward from the number you care about instead of marking up an old salary. It accounts for the two things that quietly break a freelancer's math: taxes and non-billable time.
The gross you must bill. To net your take-home after tax and after covering expenses, you must bill take-home ÷ (1 − tax rate) + expenses. Tax is applied to your post-expense profit, so the breakdown reconciles exactly: taxes (on profit) + expenses + take-home = the gross you bill. With the defaults that's $70,000 ÷ 0.70 + $6,000 = $106,000 a year.
The hours you can actually bill. You can't bill 40 hours a week — vacation, holidays, and a real share of every week go to admin, marketing, sales, and unpaid revisions. Target billable hours × working weeks × (1 − overhead) gives the hours that actually earn: 30 × 46 × 75% ≈ 1,035 hours, far below the 2,080 a salaried full-time year implies. That gap is why the rate is higher than people expect.
The rate. Divide the gross you must bill by those effective billable hours to get the required hourly rate, then multiply by your hours-per-day for a day rate. The 30% tax default and 8-hour day are editable fields, not baked-in constants — change them to match your situation.
Frequently asked questions
- What hourly rate should I charge as a freelancer?
- Work backward from what you want to keep: add your annual business expenses to your desired take-home divided by (1 − your tax rate) to get the revenue you must bill, then divide by the hours you can actually bill in a year (after vacation and non-billable admin/sales time). With a $70,000 take-home, $6,000 expenses, 30% tax, 30 billable hours a week over 46 weeks, and 25% non-billable overhead, the rate is about $102/hour.
- Why is my freelance rate higher than my old salary's hourly equivalent?
- Two reasons employees never see: you pay self-employment plus income tax on your own (no employer withholding or matching), and a big chunk of your week is non-billable — admin, marketing, sales, and unpaid revisions. Bill 30 hours but spend 25% on overhead and you only bill ~1,035 hours a year, so each hour has to carry more.
- How many hours a year can a freelancer actually bill?
- Multiply your target billable hours per week by your working weeks (after time off), then subtract your non-billable share. 30 hrs/week × 46 weeks × (1 − 25% overhead) ≈ 1,035 billable hours — far below the 2,080 a salaried "full-time year" implies.
- What tax rate should I use for freelance income?
- A common rough blend for a US sole proprietor is around 30% (self-employment tax of 15.3% on net plus federal and state income tax), but your real rate depends on income, entity type, deductions, and state. The calculator defaults to 30% and lets you change it — confirm yours with an accountant.
- How do I convert an hourly rate to a day rate?
- Multiply the hourly rate by the hours you'd bill in a day. At $102/hour and an 8-hour day that's about $819/day. The calculator does this automatically and lets you change the hours-per-day.
How to use this calculator
- Enter your target Your desired annual take-home pay and your annual business expenses.
- Set your real capacity Billable hours per week, working weeks per year (after time off), your effective tax rate, and your non-billable overhead share.
- Read your rate Get the required hourly and day rate plus a breakdown of where a year of billings goes; copy the rate for a proposal.