Reverse-calculate what to charge per hour from your target income — factoring tax, expenses, and realistic billable time.
Most freelancers set their hourly rate by guessing — or worse, by copying what others in their niche charge without doing the math. Both lead to the same problem: chronic underpricing. A rate that sounds healthy ($75/hr, say) can leave you taking home less than a $50k employee once you factor in self-employment tax, business expenses, and the reality that you don't bill 40 hours a week.
This calculator works backwards from what actually matters: the money in your bank account at the end of the year. Enter your target take-home, your realistic billable hours, your annual expenses, and a tax buffer. The result is the minimum hourly rate you need to charge to actually hit your goal.
Assumes 30 billable hrs/week, 48 weeks/year, $5,000 expenses, 25% tax buffer.
| Target Take-Home | Gross Needed | Hourly Rate |
|---|---|---|
| $50,000 | $73,333 | $51/hr |
| $75,000 | $106,667 | $74/hr |
| $100,000 | $140,000 | $97/hr |
| $150,000 | $206,667 | $144/hr |
| $200,000 | $273,333 | $190/hr |
Work backwards from your desired take-home using the formula Hourly = (Take-Home + Expenses) ÷ ((1 − Tax) × Billable Hours). Most freelancers underestimate billable hours (they're not 40/week — closer to 25–30) and forget to factor self-employment tax. This calculator handles both for you.
Realistic billable hours fall between 20 and 30 per week. The remaining "working" hours go to admin, sales, learning, unbilled client communication, proposals, invoicing, and accounting. New freelancers often plug in 40 and end up wildly under-pricing; experienced freelancers know 25 billable hours is a strong week. Try 30 as a default and adjust based on your actual time tracking.
Budget 25–30% of gross income for federal income tax plus the 15.3% self-employment tax (Social Security + Medicare). Your exact rate depends on state taxes, deductions, retirement contributions, and total income. 25% is a reasonable starting buffer; high earners in expensive states should use 30–35%. Consult a CPA for precise planning — this calculator is for ballpark estimation.
Annual costs you incur to run your freelance business: software subscriptions (Adobe, Figma, accounting tools), hardware, co-working space, professional services (CPA, lawyer), business insurance, health insurance premiums (if not covered elsewhere), marketing, education, internet/phone (business portion), and home office costs. A typical solo freelancer spends $3,000–$10,000/year. Use a number that reflects your actual situation.
A rough rule: take your target salary, divide by 1,000, and that's your minimum hourly rate. So $80,000 ⇒ $80/hr minimum. This accounts for the missing employer benefits (health insurance, 401k match, paid time off, payroll tax contribution — typically worth 30–40% on top of base salary). The "W2 salary equivalent" insight above estimates what a similarly-paying employee position would offer.
3 mistakes to avoid when setting your rate
"I want to make $80k, so I'll charge $40/hr" is the most expensive mistake a freelancer can make. That math assumes 40 billable hours a week and no taxes, expenses, or unpaid time. The actual rate to clear $80k after-tax is closer to $80/hr — double the naive number. Always run the full calculation before quoting your first client.
The rate this calculator produces is your floor — the minimum to hit your target if every billable hour is filled. Actual freelance life involves gaps: between projects, between clients, scope creep, slow-paying invoices. Quote 20–40% above your floor to absorb that variance and still hit your goal. If the calculator says $75/hr, quote $95–$105/hr.
Inflation alone justifies a 3–5% raise. Skill growth justifies more. New clients should pay 10–20% above what existing clients pay, and existing clients should see a small annual increase. Use this calculator each January with your updated income goal — you'll notice the required rate keeps creeping up. That's normal and necessary.