How to use the hourly rate calculator
- Enter the take-home income you want: the money that reaches your personal account after tax. Think in terms of a salary you'd accept.
- Add your business expenses for the year: software, equipment, insurance, a coworking desk, accounting fees, professional memberships and, in the US, health insurance if you buy your own.
- Estimate your effective tax rate. This is the share of profit you'll pay in total tax, not your top bracket. Many US freelancers land between 25% and 35% once self-employment tax is included.
- Be honest about time. Count your real weeks off and the share of your working hours you can actually bill.
The formula behind your rate
Expenses are added after grossing up for tax because business costs are generally deductible. You don't pay income tax on money spent running the business. The buffer covers what spreadsheets miss: a client who pays 60 days late, a slow January, or a laptop that dies mid-project.
Worked example: $75,000 take-home
A designer wants $75,000 a year after tax, spends $9,000 a year on the business, pays about 25% in total tax, takes six weeks off and bills 65% of a 40-hour week.
Compare that with a salaried job paying $75,000 before tax over 2,080 hours, or about $36 an hour. The freelancer has to charge nearly three times as much per hour to take home similar money. That isn't greed. It's tax, unpaid admin time, holidays and expenses an employer would normally cover.
What counts as billable time?
Billable hours are the hours a client pays for. Everything else is real work, but it's unpaid:
- Finding clients: proposals, calls, networking and portfolio updates
- Admin: invoicing, bookkeeping, email and scheduling
- Learning new tools and keeping skills current
- Gaps between projects
New freelancers often bill 40–50% of their time. Established ones with steady clients can reach 70–80%. If you're not sure, start at 60% and track your hours for a month.
Tips for setting your final price
- Treat the result as a floor. If the market rate for your skill is higher, charge the market rate.
- Round up to a clean number. $100.25 becomes $105 or $110. Clients rarely notice the difference, but your bank balance does.
- Quote projects, not hours, where you can. Use your hourly rate to estimate the effort, then quote a fixed price. Getting faster then raises your effective rate instead of lowering your income.
- Set a minimum engagement. Small jobs carry the same admin overhead as big ones.
- Review every year. Expenses and taxes rise. Raise rates for new clients first, then existing ones with notice.
Once you have a number, use the quote maker to send a professional quote.
Frequently asked questions
How much should I charge as a freelancer?
At minimum, enough to cover your target take-home pay, taxes, business expenses and unbillable time. That’s what this calculator works out. Then check what others with similar skills charge in your market and price at or above the higher of the two.
How do I convert a salary to a freelance hourly rate?
A common shortcut is to divide the annual salary by 1,000. A $75,000 salary suggests about $75 an hour. The calculator above is more accurate because it uses your real tax, expenses and billable hours, and it often gives a higher answer.
What tax rate should I use?
Use your expected effective rate: total tax divided by profit. In the US, self-employment tax adds about 15.3% on most of your profit on top of income tax, so 25–35% is a common range. An accountant can give you a precise figure.
Should I charge a day rate or an hourly rate?
Day rates reward focus and are simpler to invoice. Hourly suits small or unpredictable tasks. Many freelancers use a day rate for planned work and an hourly rate (often slightly higher) for ad-hoc requests.
Last reviewed October 11, 2026. Results are estimates for planning and are not tax, legal or financial advice. Found a mistake? Tell us.