Freelance Rate Calculator
Find the hourly rate a contractor needs to match a salary, once payroll tax, benefits, and unbillable time are covered.
How it's calculated
Going independent is not as simple as taking your salary and dividing by 2,080 hours. As a contractor you cover costs an employer used to absorb, and you bill far fewer hours than you work. To truly match a salary, your rate has to account for both.
Take the default. To match a $100,000 salary, you first add the employer half of payroll tax, about $7,650, then the benefits you now buy yourself, say $12,000, and $3,000 of business costs. That is $122,650 to cover in a year. Working 40 hours a week with 4 weeks off and billing 75 percent of your time leaves 1,440 billable hours. Dividing gives about $85 an hour, far above the naive $48 you would get from salary alone.
The two biggest levers are your benefits cost and how much of your time is actually billable. Marketing, admin, and gaps between clients all eat into billable hours, which is why a healthy utilization rate matters. When you quote a rate, start from what you need to net, not from a competitor number, so you do not accidentally take a pay cut to go independent.
Assumptions
- The rate covers the salary plus the employer half of payroll tax, your benefits, and business costs, spread over your billable hours.
- Uses the 2026 payroll tax rate. It does not model income tax, which applies to both a salary and contractor income.
Last updated: 2026-08-08 · Tax year 2026
These assumptions follow our general methodology.
Frequently asked questions
How do I set my freelance rate?
Start from the salary you want to match, add the employer payroll tax and benefits you now cover yourself, plus business costs, then divide by the hours you can actually bill in a year. That is usually far more than salary divided by 2,080.
Why is my freelance rate so much higher than my old salary?
Because a salary hides costs your employer paid, like half of payroll tax and your benefits, and because you bill fewer hours than you work. Covering those and your unbillable time pushes the rate up, often by 50 to 100 percent.
What is a billable utilization rate?
The share of your working hours you can actually charge a client for. The rest goes to finding work, admin, and downtime. Many independents bill 60 to 80 percent of their time, so plan for that gap rather than assuming every hour is billable.
Should I charge hourly or by project?
This finds the hourly rate you need, which is a solid floor. Many freelancers quote by project using that rate as the basis, which rewards efficiency and gives the client a clear price. Either way, know your number first.