Home › Business & Marketing › Freelance Hourly Rate Calculator

Freelance Hourly Rate Calculator

Derives the hourly and daily rate a freelancer must bill to reach a target annual income after business overhead and a tax reserve, given billable hours per week and weeks off per year.

When to use

You are setting or checking a freelance, consulting or contractor rate and know the income you want to keep.

Do not use when: You want to convert an employee salary to hourly pay without overhead or tax (use salary-converter) or count hours worked (use work-hours).

Formula

billable_hours = billable_hours_per_week × (52 − weeks_off_per_year); billings = target_annual_income / ((1 − overhead_percent/100) × (1 − tax_reserve_percent/100)); hourly_rate = billings / billable_hours; daily_rate = hourly_rate × hours_per_day

The tax reserve is applied to profit after overhead, as self-employment and income taxes are levied on net earnings. US self-employment tax alone is 15.3 % of net earnings (2026), so reserves of 25–35 % are typical.

Inputs

ParameterTypeUnitRequiredDescription
target_annual_incomenumberyesIncome you want left after business expenses and the tax reserve (your 'take-home' before personal spending). Range: > 0, ≤ 1000000000
billable_hours_per_weeknumberhoursyesHours you can actually invoice per working week (typically 20–30 of a 40-hour week after admin and sales). Range: > 0, ≤ 100
weeks_off_per_yearnumberweeksdefault 4Holidays, sick leave and training weeks without billing. Range: ≥ 0, ≤ 51
overhead_percentnumber%default 20Business expenses (software, insurance, equipment, accounting) as a percentage of billings. Range: ≥ 0
tax_reserve_percentnumber%default 30Share of profit (billings minus overhead) set aside for income and self-employment tax. Range: ≥ 0
hours_per_daynumberhoursdefault 8Hours in a billable day, for the daily rate. Range: > 0, ≤ 24

Outputs

OutputTypeUnitDescription
billable_hours_per_yearnumberhoursbillable_hours_per_week × (52 − weeks_off_per_year).
required_annual_billingsnumbertarget_annual_income / ((1 − overhead) × (1 − tax reserve)).
hourly_ratenumberrequired_annual_billings / billable_hours_per_year.
daily_ratenumberhourly_rate × hours_per_day.
overhead_amountnumberrequired_annual_billings × overhead_percent/100.
tax_reserve_amountnumber(billings − overhead) × tax_reserve_percent/100.

Example

80,000 target, 25 h/week, 4 weeks off, 20 % overhead, 30 % tax: {"target_annual_income":80000,"billable_hours_per_week":25,"weeks_off_per_year":4,"overhead_percent":20,"tax_reserve_percent":30} → {"billable_hours_per_year":1200,"required_annual_billings":142857.14,"hourly_rate":119.05,"daily_rate":952.38,"overhead_amount":28571.43,"tax_reserve_amount":34285.71}

60,000 target, 30 h/week, 6 weeks off, no overhead or tax: {"target_annual_income":60000,"billable_hours_per_week":30,"weeks_off_per_year":6,"overhead_percent":0,"tax_reserve_percent":0} → {"billable_hours_per_year":1380,"hourly_rate":43.48,"daily_rate":347.83}

GET https://tttkmbb.com/api/v1/calculate/freelance-hourly-rate?target_annual_income=80000&billable_hours_per_week=25&weeks_off_per_year=4&overhead_percent=20&tax_reserve_percent=30

Machine access

Sources

FAQ

Why is the rate so much higher than my old salary divided by 2,080 hours?

Employees are paid for non-billable time, holidays and employer-covered benefits and payroll taxes (about 30 % of total compensation according to BLS). Freelancers bill perhaps 1,200 hours a year and carry those costs themselves.

Is the tax reserve my actual tax rate?

No, it is a saving target. Your real liability depends on jurisdiction, deductions and brackets; 25–35 % is a common starting point for US self-employed people.

Related calculators