Tax Rate 2022 Calculator

Freelance Hourly Rate Calculator

function calculateHourlyRate() { // 1. Get Input Values var annualGoal = parseFloat(document.getElementById("annualGoal").value); var billableHoursPerWeek = parseFloat(document.getElementById("billableHours").value); var vacationWeeks = parseFloat(document.getElementById("vacationWeeks").value); var monthlyExpenses = parseFloat(document.getElementById("monthlyExpenses").value); var taxRate = parseFloat(document.getElementById("taxRate").value); // 2. Validate Inputs if (isNaN(annualGoal) || annualGoal < 0) annualGoal = 0; if (isNaN(billableHoursPerWeek) || billableHoursPerWeek <= 0) billableHoursPerWeek = 1; // Prevent div by zero if (isNaN(vacationWeeks) || vacationWeeks < 0) vacationWeeks = 0; if (isNaN(monthlyExpenses) || monthlyExpenses < 0) monthlyExpenses = 0; if (isNaN(taxRate) || taxRate < 0) taxRate = 0; // 3. Calculation Logic // Calculate total working weeks var workingWeeks = 52 – vacationWeeks; if (workingWeeks < 1) workingWeeks = 1; // Logic safety // Calculate total billable hours per year var totalBillableHours = workingWeeks * billableHoursPerWeek; // Calculate total annual overhead (expenses) var annualOverhead = monthlyExpenses * 12; // Calculate required gross revenue // Formula: (Net Goal + Expenses) / (1 – TaxRate) // Example: Want 75k net, 5k expenses, 25% tax. // Need (80k) / 0.75 = 106,666 Gross. 106k * .25 = 26.6k tax. 106-26.6-5 = 75k. var taxFactor = (100 – taxRate) / 100; if (taxFactor <= 0) taxFactor = 0.01; // Prevent div by zero or negative logic var grossRevenueNeeded = (annualGoal + annualOverhead) / taxFactor; // Calculate estimated tax amount var estimatedTaxes = grossRevenueNeeded – annualGoal – annualOverhead; // Calculate Hourly Rate var hourlyRate = grossRevenueNeeded / totalBillableHours; // 4. Update DOM / Display Results // Formatting helper var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', }); document.getElementById("finalRate").innerHTML = formatter.format(hourlyRate); document.getElementById("totalHoursDisp").innerHTML = Math.round(totalBillableHours); document.getElementById("grossRevenueDisp").innerHTML = formatter.format(grossRevenueNeeded); document.getElementById("overheadDisp").innerHTML = formatter.format(annualOverhead); document.getElementById("taxesDisp").innerHTML = formatter.format(estimatedTaxes); // Show result box document.getElementById("resultBox").style.display = "block"; }

How to Calculate Your Freelance Hourly Rate

Determining the right hourly rate is one of the most critical challenges for freelancers, consultants, and contractors. Unlike a salaried employee, your rate must cover not just your take-home pay, but also your taxes, business overhead, and unbilled time. This Freelance Hourly Rate Calculator helps you work backward from your income goals to find the perfect price point.

Why You Can't Just Divide Your Salary by 2,080

A standard full-time year is 2,080 hours (40 hours x 52 weeks). However, freelancers rarely bill 100% of their working time. You must account for:

• Non-Billable Work: Marketing, invoicing, emails, and professional development often take up 20-40% of your week.
• Vacation & Sick Days: You don't get paid time off (PTO). If you don't work, you don't earn, so your rate must subsidize your downtime.
• Self-Employment Taxes: You are responsible for both the employer and employee portion of Social Security and Medicare taxes, plus income tax.
• Overhead Costs: Health insurance, software subscriptions, hardware, and internet costs come directly out of your pocket.

The Formula Used in This Calculator

To calculate a sustainable rate, we use a "bottom-up" approach:

1. Annual Goal: Start with the net amount you want in your bank account after all costs.
2. Add Expenses: Add your annual business costs (software, equipment, etc.).
3. Factor in Taxes: Divide the sum by your inverse tax rate to find the Gross Revenue needed.
   Formula: (Goal + Expenses) ÷ (1 – Tax Rate)
4. Determine Capacity: Calculate your actual billable hours per year (Weeks worked × Billable hours per week).
5. Final Calculation: Divide the Gross Revenue by your Total Billable Hours.

What is a Good Billable Utilization Rate?

Most successful freelancers aim for a utilization rate of 60% to 75%. This means if you work a 40-hour week, only about 25 to 30 of those hours are actually billed to clients. The rest is spent on business administration. When inputting your "Billable Hours per Week" above, be realistic. Entering 40 hours assumes you will never spend time finding new clients or managing your books!

When Should You Raise Your Rates?

Once you have established your baseline using this calculator, consider raising your rates if:

• You are consistently booked out more than 4 weeks in advance.
• You have acquired a new specialized skill or certification.
• You haven't adjusted your rates for inflation in over 12 months.