Freelance rate calculator

How the calculation works

Required hourly rate = gross revenue needed ÷ total billable hours per year, where:

1. Gross revenue needed (before tax) = target income + business expenses + self-funded benefits.
2. Gross revenue with tax buffer = gross revenue needed ÷ (1 − tax buffer %). A 30% buffer means you gross up your target so that 30% of gross revenue covers taxes, leaving the target after tax.
3. Total billable hours = (52 − weeks off) × billable hours per week.

The tax buffer is a planning estimate, not a precise tax calculation. Use the quarterly tax calculator or the 1099 vs W2 comparator for a calculation based on actual 2026 brackets.

Worked example

A freelancer targeting $80,000 take-home, billing 25 hours per week for 48 weeks per year (4 weeks off), with $5,000 in annual business expenses, $8,000 in self-funded benefits, and a 30% tax buffer:

How billing more hours changes the rate

Increasing to 40 billable hours per week with no weeks off (2,080 hours/year) drops the required rate to about $63.87/hour. The gross revenue needed doesn't change — it just spreads across more hours.

Assumptions and limitations

• The tax buffer is a flat gross-up percentage, not a tax calculation. A 30% buffer is a common planning figure, but the right number depends on your actual income, deductions, and filing status. Use the quarterly tax calculator for a bracket-based estimate.
• Non-billable time (sales, admin, unpaid revisions, professional development) isn't modeled. If a third of your working hours are non-billable, your effective billable hours are much lower than the input suggests.
• This is a pricing floor, not a market rate. The calculator tells you the minimum you need to charge — whether the market will pay it is a separate question.

Frequently asked questions

What tax buffer percentage should I use?

For most single freelancers earning $50,000–$150,000, 28–32% is a reasonable starting point. Lower earners can use 22–25%; higher earners above $150,000 should use 35–40%. When in doubt, use the quarterly tax calculator to see your actual bracket-based estimate.

Should I include 401(k) contributions in the tax buffer or as a benefit cost?

Retirement contributions are tax-advantaged but still cost you cash. Enter them in "benefits you need to self-fund" to make sure the rate covers them. Don't double-count by also raising the tax buffer.

Why does billing fewer hours raise my required rate so much?

Your expenses and target income are fixed. The fewer hours you bill, the more each hour must carry. A freelancer billing 10 hours per week needs to charge several times more per hour than one billing 40, just to hit the same annual take-home.