Most new freelancers set their rate by guessing, or by quietly matching whatever a friend charges. Neither number accounts for the taxes, downtime, and business costs that a salaried job absorbs invisibly on your behalf. This calculator works backward from the income you actually want to keep, to the rate you need to charge to keep it.
How it works
Start from your target take-home income: what you want left over after tax and expenses, not your total invoiced revenue.
Add your annual business expenses (software, insurance, equipment, a portion of your workspace) on top, since these have to be earned back before you see a dollar of income.
Add estimated self-employment tax. In the US, this is 15.3% of 92.35% of your net earnings, covering the Social Security and Medicare contributions an employer would otherwise split with you.
Divide the total by your realistic billable hours per year, not 40 hours a week, 52 weeks a year, but the hours you can actually invoice once admin time, marketing, sick days, and slow weeks are accounted for.
A worked example
Say you want to take home $80,000, expect $6,000 in business expenses, and can realistically bill 25 hours a week for 47 weeks a year (1,175 billable hours). After adding roughly $11,300 in estimated self-employment tax, you need about $97,300 in total revenue, which works out to a rate near $83/hour, or about $660 for a full day of client work.
Questions people ask
Why is the recommended rate higher than my old salary divided by hours?
A salaried hourly-equivalent usually assumes you're paid for 2,080 hours a year (40 × 52) and that your employer separately covers half your payroll tax, benefits, and downtime. As a freelancer, all of that has to come out of your rate instead.
What counts as a billable hour?
Only time you can actually invoice a client for. Proposal writing, invoicing, marketing, and admin work are real hours in your week, but they aren't billable, which is why most freelancers can realistically bill 20–30 hours a week, not 40.
Does this account for benefits like health insurance or retirement?
Only if you include them in "annual business expenses." If you're self-funding health insurance or a retirement contribution, add the annual cost there so it's built into your rate.
Is the self-employment tax estimate accurate for my situation?
It's a planning estimate based on the standard 15.3% US self-employment tax rate applied to 92.35% of net earnings. It doesn't account for income tax brackets, deductions, or non-US tax systems. Use it to set a rate, and confirm your actual tax liability with an accountant.
Should I charge this exact rate to every client?
Treat it as a floor, not a fixed price. It's the minimum that sustains your income goal. You can charge more for specialized work, rush timelines, or high-value clients.