# 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.

- Calculator id: `freelance-hourly-rate` · Category: Business & Marketing (`business`) · Tool name: `calculate_freelance_hourly_rate`
- Canonical page: https://tttkmbb.com/business/freelance-hourly-rate · This document: https://tttkmbb.com/business/freelance-hourly-rate.md · JSON definition: https://tttkmbb.com/business/freelance-hourly-rate.json

## Purpose

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.

**Use when:** 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).

## Input

| Parameter | Type | Unit | Required | Description |
| --- | --- | --- | --- | --- |
| `target_annual_income` | number |  | required | Income you want left after business expenses and the tax reserve (your 'take-home' before personal spending). (> 0, max 1000000000) |
| `billable_hours_per_week` | number | hours | required | Hours you can actually invoice per working week (typically 20–30 of a 40-hour week after admin and sales). (> 0, max 100) |
| `weeks_off_per_year` | number | weeks | optional, default 4 | Holidays, sick leave and training weeks without billing. (min 0, max 51) |
| `overhead_percent` | number | % | optional, default 20 | Business expenses (software, insurance, equipment, accounting) as a percentage of billings. (min 0) |
| `tax_reserve_percent` | number | % | optional, default 30 | Share of profit (billings minus overhead) set aside for income and self-employment tax. (min 0) |
| `hours_per_day` | number | hours | optional, default 8 | Hours in a billable day, for the daily rate. (> 0, max 24) |

## Output

| Field | Type | Unit | Description |
| --- | --- | --- | --- |
| `billable_hours_per_year` | number | hours | billable_hours_per_week × (52 − weeks_off_per_year). |
| `required_annual_billings` | number |  | target_annual_income / ((1 − overhead) × (1 − tax reserve)). |
| `hourly_rate` | number |  | required_annual_billings / billable_hours_per_year. |
| `daily_rate` | number |  | hourly_rate × hours_per_day. |
| `overhead_amount` | number |  | required_annual_billings × overhead_percent/100. |
| `tax_reserve_amount` | number |  | (billings − overhead) × tax_reserve_percent/100. |

## 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.

## Data Sources

- IRS – Self-Employment Tax (Social Security and Medicare Taxes) — https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes (government, retrieved 2026-09-24)
- US Bureau of Labor Statistics – Employer Costs for Employee Compensation — https://www.bls.gov/news.release/ecec.nr0.htm (government, retrieved 2026-09-24)

Data freshness: `static`. Deterministic formula with fixed constants; results never go stale. Inputs supplied by the caller determine the output.

## API

- `GET https://tttkmbb.com/api/v1/calculate/freelance-hourly-rate?target_annual_income=…&billable_hours_per_week=…`
- `POST https://tttkmbb.com/api/v1/calculate/freelance-hourly-rate` with JSON body `{"inputs": {…}}`
- Response: unified envelope (`success`, `request`, `result.values`, `result.units`, `sources`, `freshness`, `timestamp`, `next_actions`, `links`); see https://tttkmbb.com/docs/response-format.md
- Schema: https://tttkmbb.com/api/v1/calculators/freelance-hourly-rate · OpenAPI operationId `calculate_freelance_hourly_rate` in https://tttkmbb.com/openapi.json
- Authentication: none. Rate limit: fair use, see https://tttkmbb.com/docs/rate-limits.md.

## MCP

- Server: `https://tttkmbb.com/mcp` (Streamable HTTP, JSON-RPC 2.0, no auth)
- Tool:  `run_calculator` with `{"calculator_id": "freelance-hourly-rate", "inputs": {…}}`

## Example

- 80,000 target, 25 h/week, 4 weeks off, 20 % overhead, 30 % tax: inputs `{"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: inputs `{"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
```

## Limitations

You want to convert an employee salary to hourly pay without overhead or tax (use salary-converter) or count hours worked (use work-hours). 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. All values are computed from the formula above; no measurement or live data is involved.

## 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

- [Salary Converter](https://tttkmbb.com/finance/salary-converter.md) — Convert between hourly, monthly and annual pay without overhead.
- [Work Hours Calculator](https://tttkmbb.com/everyday/work-hours.md) — Count hours worked between clock times.
- [Margin and Markup Calculator](https://tttkmbb.com/finance/margin-markup.md) — Mark up costs for project pricing.