Freelancer Rate Calculator
Figure out exactly what hourly rate to charge to hit your income goals, after taxes and expenses.
Why can't freelancers just divide salary by 2,080 hours?
A common mistake new freelancers make is taking a target salary and dividing it by 2,080 (40 hours × 52 weeks), the way an employee's hours might be counted. But freelancers rarely bill 40 hours a week — time gets eaten up by admin work, marketing, proposals, invoicing, and client communication that isn't billable. Most freelancers realistically bill somewhere between 20 and 30 hours per week, even if they "work" far more than that. Vacation, sick days, and slow periods also mean most freelancers work fewer than 52 weeks per year at full capacity.
Why does the tax buffer matter so much?
Unlike traditional employees, freelancers and independent contractors don't have taxes withheld from every paycheck. On top of ordinary income tax, self-employed workers in the US owe self-employment tax (Social Security and Medicare, roughly 15.3% combined) on top of federal and state income tax. That's why this calculator builds in a tax buffer — typically 25-30% of gross revenue — so you're not caught off guard with a huge bill at tax time. Setting aside this percentage from every invoice as it comes in is one of the most important habits for a sustainable freelance business.
What should be included in "business expenses"?
Business expenses cover everything you spend to run your freelance operation that a salaried employee wouldn't pay for out of pocket: software subscriptions, a portion of your internet and phone bill, professional liability insurance, health insurance premiums, coworking space or home office costs, accounting/bookkeeping fees, and continuing education. These costs need to be covered by your rate just like your take-home income does — if you don't factor them in, your "profit" quietly evaporates.
Frequently Asked Questions
How many hours a week should I plan to bill as a freelancer?
Most freelancers bill between 20 and 30 hours per week even when working full-time, since the rest goes to admin, marketing, and client communication. Use a lower number if you're new and still spending a lot of time on business development.
Why is my calculated freelance rate so much higher than my old salary divided by hours?
Because as a freelancer you're also covering self-employment tax, business expenses, unpaid time off, and non-billable admin hours — none of which an employer previously absorbed for you. Your rate has to account for all of it, not just your take-home pay.
What percentage should I set aside for taxes as a freelancer?
A common rule of thumb is 25-30% of gross revenue, covering self-employment tax plus federal and state income tax. Your exact number depends on your total income, deductions, and state — a tax professional can refine this for your situation.
Should I include business expenses in my rate calculation?
Yes. Software, insurance, coworking space, and other business costs need to be covered by your revenue. If you leave them out of your rate calculation, they'll silently eat into what you thought was take-home income.
How many weeks per year do freelancers actually work?
Many freelancers plan around 46-48 working weeks per year to account for vacation, sick time, holidays, and slow periods between projects, rather than assuming all 52 weeks are billable.
Is it okay to charge less than the calculated rate for some clients?
You can, but be intentional about it — occasional discounts for passion projects or long-term clients are fine, but consistently underpricing across your client base means you won't hit your income goals even if you're fully booked.
Should I raise my rate every year?
Reviewing your rate annually is a good habit, especially as your expenses, skill level, and demand for your work increase. Many freelancers raise rates 5-10% per year or more when they're consistently booked out.
Does this calculator account for state income tax differences?
The tax buffer here is a general planning estimate. If you're in a high-tax state, consider using a higher buffer percentage; if you're in a state with no income tax, you may be able to use a slightly lower one.