2026 · US · Updated May 19, 2026

Freelance Rate Calculator

Most people undercharge as freelancers because they compute the rate wrong. “Salary divided by hours” ignores self-employment tax, benefits an employer used to cover, and the fact that you can only invoice about 60% of your working time. Enter your numbers below and see the actual rate.

Your numbers

$
The salary equivalent you want from this work. Use your current W-2 salary to find the matching freelance rate.

Your schedule

Default 48 weeks leaves 4 weeks for vacation, sick, holidays.
What share of your work time you actually invoice. Industry benchmark is 60–70% for solo freelancers — the rest goes to admin, marketing, sales, learning.

Benefits to replace

$
Default $600/month is roughly a single-person Silver ACA Marketplace plan. Family coverage runs $1,500–$3,500/month depending on age and location.
SEP-IRA or Solo 401(k) target. 10% is a starting point; an employer 401(k) match would have provided ~3–6% on top of salary, so this matches that.
Cushion for slow months, business expenses, tax under-estimates, and growth. 20% is a sensible floor for solo freelancers.
What this doesn’t include: Federal income tax (which an employee at your target salary would also owe, so it cancels in the comparison) and state income tax. Business expenses you can deduct (software, home office, equipment) lower your taxable income — they don’t need to be added on top of the rate.

Your 2026 rate

Naive rate (what most people compute)Salary ÷ total work hours. Ignores SE tax, benefits, non-billable time.
$31.25/hr
Minimum survival rateCovers income + benefits + SE tax. No profit, no buffer.
$74.00/hr
Target rate (with 20% margin)The rate to actually charge.
$88.80/hr

Where the numbers come from

Total work hours / year40 hrs/week × 48 weeks
1,920
Billable hours / year60% of total — what you can actually invoice
1,152
Desired take-home income
$60,000
Annual health insurance$600/month × 12
$7,200
Annual retirement contribution10% of desired income
$6,000
Self-employment tax burden15.3% on 92.35% of net SE income (Social Security + Medicare)
$12,045
Net SE income neededWhat lands on your Schedule C before income tax
$85,245
Target annual revenueWith buffer margin applied — the actual gross you should aim for
$102,294

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Freelance pricing playbook

2026 rate formula, retirement contribution limits, ACA health insurance options, the Schedule C deductions service freelancers miss, and a rate-raising checklist. Delivered now.

  • Rate formula on one page (with worked example)
  • 2026 SEP-IRA, Solo 401(k), and HSA contribution limits
  • Schedule C deductions freelancers actually use

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The three reasons salary ÷ hours is wrong

  1. Self-employment tax (~14% effective) — as an employee, your employer paid half of Social Security and Medicare (7.65%) on top of your salary. You never saw it. As a freelancer you pay both halves — 15.3% on 92.35% of your net business income, which works out to a 14.13% effective rate.
  2. Benefits replacement (~30% of compensation)— the US Bureau of Labor Statistics’ latest data (Dec 2025) shows benefits are about 29.9% of total private-sector compensation. Health insurance is the biggest piece — a typical Silver ACA plan for a single person runs around $600/month in 2026, more for family coverage and after the enhanced premium tax credits expired at the end of 2025.
  3. Billable utilization (~60%) — solo freelancers typically can only invoice 50–70% of their working time. The rest goes to prospecting, proposals, contracts, admin, bookkeeping, and learning. If you bill 40 hours, you probably worked 60-70.

Worked example: matching a $60,000 salary

Say you want freelancing to feel like a $60,000-a-year W-2 job. Working 40 hours a week for 48 weeks, billing 60% of the time:

  • Total work hours: 1,920
  • Billable hours: 1,152
  • Need after SE tax: $60,000 + $7,200 health + $6,000 retirement = $73,200
  • Net SE income required: ~$85,250 (gross-up for 14.13% SE tax burden)
  • Minimum hourly rate: ~$74/hr
  • Target rate with 20% buffer: ~$89/hr
  • What naive math suggests: $31/hr (salary ÷ total hours — which would leave you bankrupt within a year)

The gap between $31 and $89 is real — it’s exactly the difference between what employees feel they make and what an employer actually spent to employ them, multiplied by the billable-time penalty.

What this calculator deliberately leaves out

  • Federal income tax — an employee at your target salary owes the same income tax you would. It cancels in the comparison.
  • State income tax — varies wildly by state. Same cancellation logic.
  • Business expenses — software, home office, equipment. These are deductible on Schedule C; they reduce your taxable income rather than raising your rate.

Pair this with the tax math

Once you know your rate, use our Self-Employment Tax Calculator to see what you’ll owe the IRS at year end, and the quarterly tax guide to avoid underpayment penalties.

These are estimates, not tax or business advice. Your situation may differ — high earners hit the Social Security wage base cap and the SE tax effective rate drops accordingly (the calculator handles this), and people with significant business expenses on Schedule C should think in terms of net SE income, not gross revenue.

Where these numbers come from

The rate conversion accounts for the employer-paid costs you absorb when self-employed: both halves of Social Security and Medicare, benefits replacement, unbillable hours, and unpaid time off. The tax constants are transcribed from these sources:

Constants last verified against these sources on June 10, 2026. Every value is also pinned by an automated test suite that fails if a rate in the calculator drifts from the figure we transcribed from the source.

Frequently asked questions

Why is the recommended rate so much higher than salary ÷ hours?
Three things employees never see: (1) your employer paid the other half of FICA (7.65%) — as a freelancer you pay both halves (15.3% self-employment tax) on top. (2) Your employer paid your health insurance, retirement match, and gave you paid vacation — that's worth roughly 30% of total compensation per BLS data (Dec 2025). (3) You can only actually invoice about 60% of your working hours — the rest is sales, admin, marketing, learning. Multiply those three together and a $60k salary really needs ~$75-90/hr freelancing.
What's a realistic billable utilization rate?
Solo freelancers typically bill 50-70% of their working hours. The rest goes to prospecting, proposals, contracts, admin, bookkeeping, learning, and marketing. New freelancers often see 40-50% until they build a pipeline. Agencies and consulting firms target 70-85% but they have dedicated sales/admin staff. If you're starting out, plan for 50% for the first year, then climb.
Should I include income tax in the rate?
No, and that's intentional. An employee earning your target salary owes the same federal income tax you would on freelance income. It cancels out in the comparison. What an employee doesn't pay — and what makes freelancing 'cost more' — is the extra half of FICA (self-employment tax) plus the benefits the employer covered. Those are what this calculator captures. State income tax is also excluded for the same reason.
What about business expenses — software, equipment, home office?
Don't add them to the rate. Those are deductible on Schedule C and reduce your taxable income. They come out of revenue before SE tax and income tax. The rate this calculator gives is the rate per billable hour — your business expenses are funded from your gross revenue separately, and they lower your tax bill rather than raising your rate.
Is $600/month a realistic health insurance estimate?
It's a reasonable midpoint for a single person on a Silver ACA Marketplace plan in most US states, age 30-45, no subsidy. Younger people pay less ($300-500), older pay more ($700-1,200). Family coverage runs $1,500-3,500/month depending on age and state. ACA premiums for 2026 are roughly 11-20% higher than 2025 because the enhanced premium tax credits from the American Rescue Plan expired Dec 31, 2025. Run the actual numbers on healthcare.gov for your situation.
Why default to 48 weeks instead of 52?
Because you're going to take vacation, get sick, attend conferences, and lose at least one week to holidays. Employees get 10-15 paid holidays plus 2-4 weeks vacation built in. As a freelancer, those weeks come out of your earning capacity — 48 weeks is the conservative version (4 weeks off) and many freelancers should plan for 46-47 once you account for both holidays and personal time.
What if I want to charge per-project instead of hourly?
Use this calculator to find your target hourly rate, then estimate honestly how many hours a project will take (track historical projects, then add 30% for unknowns). Project price = hours × target rate. The big advantage of fixed-price work is that efficiency gains accrue to you, not the client — but you have to estimate accurately or you'll work for half your target rate when projects run long.

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