Calculate North Carolina Income Tax

Freelance Hourly Rate Calculator

Your Minimum Hourly Rate Should Be:

function calculateFreelanceRate() { var targetIncome = parseFloat(document.getElementById("targetIncome").value); var annualExpenses = parseFloat(document.getElementById("annualExpenses").value); var billableWeeks = parseFloat(document.getElementById("billableWeeks").value); var billableHours = parseFloat(document.getElementById("billableHours").value); var taxRate = parseFloat(document.getElementById("taxRate").value); if (isNaN(targetIncome) || isNaN(annualExpenses) || isNaN(billableWeeks) || isNaN(billableHours) || isNaN(taxRate)) { alert("Please enter valid numbers in all fields."); return; } // Calculate total gross needed to reach net target after taxes var taxMultiplier = 1 – (taxRate / 100); var totalGrossNeeded = (targetIncome + annualExpenses) / taxMultiplier; // Calculate total annual billable hours var annualBillableHours = billableWeeks * billableHours; // Calculate rate var hourlyRate = totalGrossNeeded / annualBillableHours; var resultDiv = document.getElementById("rateResult"); var rateSpan = document.getElementById("finalRate"); var breakdownSpan = document.getElementById("breakdownText"); rateSpan.innerHTML = "$" + hourlyRate.toFixed(2); breakdownSpan.innerHTML = "To net $" + targetIncome.toLocaleString() + " per year after paying $" + (totalGrossNeeded – targetIncome – annualExpenses).toFixed(0).toLocaleString() + " in taxes and $" + annualExpenses.toLocaleString() + " in overhead, you must earn a gross total of $" + totalGrossNeeded.toFixed(0).toLocaleString() + " annually over " + annualBillableHours + " billable hours."; resultDiv.style.display = "block"; resultDiv.scrollIntoView({ behavior: 'smooth' }); }

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How to Determine Your Freelance Hourly Rate

Setting your hourly rate is one of the most critical decisions you will make as a freelancer or independent contractor. Many new freelancers make the mistake of simply looking at what their former salary was and dividing it by 2,000 hours. This often leads to undercharging because it ignores taxes, overhead, and the reality of non-billable time.

The Components of a Sustainable Rate

• Target Net Income: This is the "take-home" pay you need to cover your personal mortgage, groceries, savings, and lifestyle.
• Business Overhead: Unlike an employee, you pay for your own laptop, software subscriptions (Adobe, Office, CRM), health insurance, and home office utilities.
• Self-Employment Tax: You are responsible for both the employer and employee portions of social security and Medicare, plus income tax. This usually adds 25% to 35% to your needed gross revenue.
• The "Billable Hour" Reality: You cannot bill 40 hours a week. A significant portion of your time is spent on "admin" work—marketing, invoicing, client meetings, and professional development. Most successful freelancers average 20 to 30 billable hours per week.

Example Calculation

Let's say you want to take home $70,000. You have $10,000 in annual business expenses. You estimate your tax burden at 30%. You want 4 weeks of vacation (48 weeks working) and expect to bill 25 hours per week.

Step 1: Gross Revenue Needed
($70,000 + $10,000) / (1 – 0.30) = $114,285 total gross revenue.

Step 2: Total Annual Hours
48 weeks x 25 hours = 1,200 billable hours.

Step 3: Hourly Rate
$114,285 / 1,200 hours = $95.24 per hour.

Value-Based Pricing vs. Hourly

While an hourly rate is a great baseline for your internal math, consider moving toward project-based or value-based pricing as you gain experience. If you can complete a logo in two hours that provides $5,000 of value to a company, charging $190 (two hours of work) leaves money on the table. Use this calculator to find your "floor"—the minimum you must charge to keep your business healthy.