Il Income Tax Rate Calculator

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Freelance Target Hourly Rate Calculator

The actual amount you want to take home after taxes and expenses.

Software, equipment, insurance, internet, etc.

Income tax + self-employment tax combined.

Standard is 52. Subtract vacation/sick time (e.g., 48).

Realistic hours actually charged to clients (often 20-30 for full-timers).

Fill in the details above to see your minimum hourly rate.
function calculateFreelanceRate() { // 1. Get inputs var targetNet = parseFloat(document.getElementById('targetNetIncome').value); var annualExpenses = parseFloat(document.getElementById('annualExpenses').value); var taxRate = parseFloat(document.getElementById('taxRate').value); var weeksWorked = parseFloat(document.getElementById('weeksWorked').value); var billableHoursPerWeek = parseFloat(document.getElementById('billableHoursPerWeek').value); // 2. Validate inputs if (isNaN(targetNet) || isNaN(annualExpenses) || isNaN(taxRate) || isNaN(weeksWorked) || isNaN(billableHoursPerWeek)) { document.getElementById('rateResult').innerHTML = 'Please fill in all fields with valid numbers.'; return; } if (weeksWorked <= 0 || billableHoursPerWeek <= 0) { document.getElementById('rateResult').innerHTML = 'Working weeks and billable hours must be greater than zero.'; return; } if (taxRate >= 100 || taxRate < 0) { document.getElementById('rateResult').innerHTML = 'Please enter a realistic tax rate between 0 and 99.'; return; } // 3. Calculation Logic // Calculate Gross Income needed to net the target amount. // If tax rate is 30%, you keep 70% (1 – 0.30). Gross = Net / 0.70 var taxMultiplier = 1 – (taxRate / 100); var grossIncomeNeeded = targetNet / taxMultiplier; // Total Revenue Goal (Gross Income + Expenses that need covering) var totalRevenueGoal = grossIncomeNeeded + annualExpenses; // Total Annual Billable Hours var totalBillableHours = weeksWorked * billableHoursPerWeek; // Required Hourly Rate var requiredHourlyRate = totalRevenueGoal / totalBillableHours; // 4. Display Result document.getElementById('rateResult').innerHTML = '
Required Hourly Rate: $' + requiredHourlyRate.toFixed(2) + '
' + '
Total Annual Revenue Goal: $' + totalRevenueGoal.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}) + '
' + '
Total Billable Hours/Year: ' + totalBillableHours + '
'; }

Stop Guessing: A Data-Driven Approach to Your Freelance Rate

One of the most common mistakes new freelancers make is the "full-time math error." They take their previous annual salary, divide it by 2,080 (the standard number of working hours in a year), and set that as their hourly rate.

This approach guarantees you will undercharge. As an employee, your employer paid for half of your Social Security and Medicare taxes, provided equipment, covered software licenses, and paid you for vacations, sick days, and water-cooler chat. As a freelancer, you bear all those costs yourself.

This Freelance Target Hourly Rate Calculator uses a reverse-engineering approach. Instead of guessing a rate, you start with how much money you actually want to put in your pocket at the end of the year (your Net Income), and it calculates what you need to charge to achieve that reality.

Understanding the Calculator Inputs

  • Target Annual Net Income: This is your "take-home pay" goal. It's the money left over for your personal life after business expenses and taxes are paid.
  • Estimated Annual Business Expenses: You must account for every cost of running your business. This includes web hosting, Adobe Creative Cloud subscriptions, new laptops, professional insurance, home office utility portions, and internet costs.
  • Estimated Total Tax Rate: Freelancers in the US, for example, pay self-employment tax (approx. 15.3%) on top of standard federal and state income taxes. A safe estimate for many is often between 25% and 35%, but consult an accountant.
  • Billable vs. Working Hours: This is crucial. You might work 40 hours a week, but you cannot bill 40 hours. You spend time marketing, invoicing, answering emails, and learning new skills. These are non-billable hours. A realistic billable target for a healthy freelance business is often 20 to 30 hours per week.

Example Scenario

Let's say a freelance graphic designer wants a lifestyle equivalent to a $75,000 salary.

  • Target Net Income: $75,000
  • Annual Expenses: $5,000 (software, computer upgrade, internet)
  • Tax Rate: 30% (combined self-employment and income tax estimate)
  • Working Weeks: 48 (taking 4 weeks off for vacation/sick time)
  • Billable Hours Per Week: 25 (realistic actual client work)

Using the calculator, to net $75,000, this designer needs to generate roughly $112,142 in total gross revenue. Given their available billable hours (1,200 per year), their required hourly rate is approximately $93.45/hr.

Had they just divided $75,000 by 2080 standard hours, they would have charged $36/hr and found themselves unable to pay their bills.

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