What this measures
Take your salary and divide by 2,080 hours, and you'll land on a number that looks like a fair hourly rate. It isn't. That math assumes you bill every hour of a 40 hour week, all year, and that nothing gets deducted before the money reaches you. This calculator works backward from what you actually want to take home, correctly, to the rate that gets you there.
The formula
Hourly rate = gross revenue needed ÷ (billable hours per week × working weeks per year)
Taxes come out of your business income before it becomes take-home pay, so the gross figure has to be large enough to cover both your take-home goal and the tax on it, not just your take-home goal alone. That's why dividing by (1 minus your tax rate) matters more than it might look like it should.
A quick example
Say you want $70,000 to actually land in your pocket, you expect $8,000 in business expenses, and your combined tax rate is 30%. You'd need $108,000 in gross revenue for the year. Billing 25 hours a week for 48 weeks gives you 1,200 billable hours, so your rate needs to be $90 an hour. A naive $70,000 ÷ 2,080 calculation would have suggested about $34 an hour, less than half of what you actually need.
Frequently asked questions
Why is my rate so much higher than a salary divided by hours worked?
Because a salaried employee doesn't pay the employer's half of payroll taxes, doesn't buy their own health insurance or equipment out of that salary, and gets paid for a full 40 hour week even during slow periods. A freelance rate has to cover all of that itself, which is why it needs to be meaningfully higher than a simple salary-to-hourly conversion suggests.
Why aren't my billable hours just 40 a week?
Because time spent on proposals, invoicing, marketing, client calls that don't get billed, and finding the next project doesn't disappear, it just isn't paid for directly. Most freelancers can only bill a portion of their working time, which is exactly why this calculator asks for your realistic number instead of assuming a full work week.
What tax rate should I actually use?
Whatever applies where you live and how your business is structured, this varies enough by location that there's no single correct default. If you don't know your number yet, a rough combined estimate of 25% to 35% is a reasonable planning starting point for many places, but check with a tax professional for your actual rate.
How does this compare to what I'd earn as an employee?
Roughly, a freelance rate needs to run well above a simple salary-to-hourly figure to land on equivalent take-home pay, since an employer typically covers a meaningful share of taxes and benefits that a freelancer has to fund alone. If you want to see the true loaded cost of an employee for a direct comparison, our Employee Cost Calculator breaks that down in detail.