· ReadyStack
Worked example
Real numbers from this tool, line by line.
A US graphic designer leaving a W-2 job that paid $62,960 needs to bill $71.56 an hour as a 1099 freelancer, not the $30.27 that salary ÷ 2,080 hours suggests. Here is the full result for that designer, with $8,400 a year of health insurance and retirement they now pay themselves, $4,800 of business costs and 25 billable hours a week for 46 weeks:
- Employee FICA the W-2 job withheld: $4,816.44
- Net profit needed (Schedule C): $77,492.97
- Self-employment tax (Schedule SE): $10,949.41
- Revenue to invoice per year: $82,292.97
- Billable hours per year: 1,150
- Minimum hourly rate: $71.56, or $572.47 for an 8-hour day
- Shortfall at $30.27 an hour: $47,483.35 a year
The $62,960 is not made up: it is the BLS OEWS May 2025 median for graphic designers, and $30.27 is the matching median hourly wage. Many new freelancers quote exactly that.
Where the gap comes from
Three things a salary hides.
First, payroll tax. On a W-2 you pay 7.65% (6.2% Social Security up to the wage base plus 1.45% Medicare) and your employer pays the other 7.65%. As a freelancer you pay both halves through Schedule SE: 12.4% plus 2.9% on 92.35% of your net profit. For 2026 the 12.4% part stops at a wage base of $184,500 (IRS Publication 15). In the example that is $10,949.41 of self-employment tax against $4,816.44 the job withheld, so $6,132.97 a year more.
Second, benefits. The job paid for health insurance and a retirement match. Now that money comes out of your profit. The calculator adds back whatever you type, $8,400 in the example.
Third, hours. A salary pays 2,080 hours: 40 hours, 52 weeks, holidays included. A freelancer bills far fewer. Sales calls, admin, invoicing, learning and gaps between clients are unpaid. At 25 billable hours for 46 weeks you bill 1,150 hours, so every dollar you need is spread over 55% of the hours a salary covers.
How the calculation works
The calculator first takes what the job leaves you after employee FICA and adds the benefits it paid: $66,543.56. Then it finds the net profit that leaves the same amount after Schedule SE tax. Below the wage base that is the target divided by (1 − 0.9235 × 0.153), here $77,492.97. Above the wage base only the 2.9% Medicare part keeps growing, and the calculator switches formula on its own. Business costs go on top to give revenue, and revenue divided by billable hours is your rate.
Change one number and watch it move
Billable hours matter most. The same designer at 20 hours a week needs $89.45 an hour and falls $54,445.28 short at $30.27. A software developer matching the BLS median of $135,980, paying $12,000 for benefits and $6,000 of costs and billing 30 hours for 46 weeks, needs $120.45 an hour, not $65.38. That shortfall is $75,997.72 a year, with $22,637.69 of Schedule SE tax.
What it leaves out, on purpose
Federal and state income tax are not in the rate, because they apply to the salary too. The deduction for half of your SE tax lowers your income tax a little, so the result is slightly on the safe side. The 0.9% Additional Medicare Tax above $200,000 is not included.
Try it with your numbers
The free calculator runs in your browser. You type 5 numbers: the salary you want to match, the benefits you now fund, your yearly business costs, your billable hours per week and the weeks you bill. All 12 result lines appear at once. Nothing is blocked and nothing is sent anywhere. The wage base is its own cell, so on January 1, 2027 you type the new figure. Not tax advice.
15 seconds — what it actually does
Questions people ask
What does this freelance rate calculator work out?
It finds the minimum hourly rate a US freelancer must bill to match a W-2 salary in 2026. It adds back the benefits you now fund, applies Schedule SE self-employment tax (12.4% + 2.9% on 92.35% of net profit, 12.4% capped at the $184,500 wage base), adds business costs and divides by the hours you can actually bill.
Who is it for?
US freelancers and 1099 contractors, such as designers, developers, writers and consultants, who are leaving a W-2 job or quoting a first client. It suits anyone paid on Form 1099-NEC who must cover their own Social Security and Medicare through Schedule SE and wants a rate that still pays the same as the old salary.
Why not just divide my salary by 2,080 hours?
Salary ÷ 2,080 assumes 40 paid hours every week of the year and an employer paying half your FICA. Example: a graphic designer matching the BLS median $62,960 gets $30.27 an hour that way, but with $8,400 benefits, $4,800 costs and 1,150 billable hours needs $71.56. The shortcut leaves $47,483.35 a year uncovered.
What is free and what does the $21 file add?
Free in the browser: you type 5 numbers (salary to match, benefits, business costs, billable hours per week, weeks billed) and see all 12 result lines, with nothing blocked. The $21 one-time workbook adds a utilization table at 15 to 35 hours a week, a 15-line project quote sheet and day, week and month retainer prices you keep.
How does it compare with asking an accountant?
An accountant can run the same Schedule SE numbers; BLS OEWS May 2025 puts accountants and auditors at a mean $45.56 an hour as employees, before any firm markup. This page gives the full answer free for your own numbers, and the workbook is one $21 payment, not a subscription. It is not tax advice.
When do these numbers change next?
On January 1, 2027 the Social Security wage base changes from $184,500, the 2026 figure in IRS Publication 15, to the 2027 amount the Social Security Administration announces each October. Update the wage base cell then. The 92.35%, 12.4% and 2.9% Schedule SE rates are set by law and did not change for 2026.
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