Set the annual income you want to take home. This works backward through real self-employment tax, health insurance, and overhead to find the hourly rate that gets you there — not just income divided by hours.
⚠ Your net business income is high enough that the 20% QBI deduction may start phasing out — the required rate above could be modestly understated. Check with a tax pro.
Why "income ÷ hours" always comes up short
The simplest freelance rate formula — desired income plus expenses, divided by hours — leaves out the biggest cost of going independent: taxes. It treats a dollar you bill as a dollar you keep, when in reality a big chunk of it goes to self-employment tax and federal income tax before you ever see it.
This calculator solves the real equation instead, working backward from the number that actually matters — what lands in your account — to the rate that gets you there.
What actually moves your rate
Billable hours. Most freelancers overestimate this. Admin, proposals, and slow weeks all eat into hours you can actually invoice.
Self-employment tax. 15.3% of your business profit goes to Social Security and Medicare before income tax even applies.
Health insurance. With no employer subsidy, this is usually the single largest fixed cost in a freelancer's overhead.
Business expenses. Software, equipment, and workspace costs all have to be earned back before a dollar becomes take-home pay.
Frequently asked
Why is my required rate so much higher than my target income divided by my hours?
Because that simple division ignores taxes entirely. Once you add back roughly 15–25% for self-employment and federal tax, plus health insurance and overhead, the real rate is almost always noticeably higher than the naive number.
How many hours a week should I plan to actually bill?
Most full-time freelancers land between 25–32 billable hours a week once client work, admin, and marketing are separated out — even though they may "work" 40+.
Should I include software, coworking space, or other subscriptions as business expenses?
Yes — anything you pay for specifically to run your business belongs in that field. It both reduces your taxable income and needs to be earned back through your rate.
What happens if I land more or fewer billable hours than planned?
Your take-home moves with it. More billable hours at the same rate means more income (and a bit more tax); fewer hours means you fall short of your target — which is exactly why it's worth padding your "weeks you'll actually bill" input conservatively.
Does this account for slow months or unpaid time off?
Indirectly, yes — through the "weeks you'll actually bill" field. Set it below 52 to reflect the reality that, unlike a salaried job, unbilled time on a 1099 rate is unpaid time.
How this is calculated
Uses 2026 federal tax brackets and standard deduction (IRS Rev. Proc. 2025-32) and the 2026 Social Security wage base ($184,500).
Self-employment tax is 15.3% on 92.35% of net business income, with the usual half-SE-tax deduction and a simplified 20% Qualified Business Income deduction (assumes you fully qualify, with no phase-out modeling beyond the warning flag above).
The required rate is found by solving numerically: the tool tests rates until take-home pay after tax, health insurance, and expenses matches your target, rather than applying a fixed formula.
State and local income tax and itemized deductions are not included.
This is an estimate for planning purposes, not tax advice.