Why your rate needs to be higher than you think
You can't bill 2,080 hours
A full-time job is 40 hours × 52 weeks = 2,080 hours. As a freelancer, take out vacation, holidays and sick days (6 weeks is realistic). Then take out the non-billable work: sales, email, invoicing, admin. At 65% billable you have about 1,200 billable hours a year, not 2,080. That alone means charging roughly 1.7× the hourly rate of a salary.
You're also paying the employer's share
Employees pay 7.65% for Social Security and Medicare, and the employer quietly pays another 7.65%. Freelancers pay both, as 15.3% self-employment tax on 92.35% of profit. That's on top of income tax. Your benefits, like health insurance and retirement, now come out of your rate too.
So how does this calculator work?
It finds the yearly revenue where take-home pay equals your target. Take-home here means revenue minus business expenses, health insurance, retirement savings, federal tax and state tax. Federal tax uses the 2026 brackets, self-employment tax with the Social Security cap, the half-SE-tax deduction, the self-employed health insurance deduction and the QBI deduction. It then divides that revenue by your billable hours.
Turning the number into a quote
Treat the result as your floor, not your price. Add a buffer for gaps between clients and slow payers (the quote above adds 10%). For fixed-price projects, estimate the hours per task, multiply by your rate and add 10-20% for scope creep.