Convert your salary to an equivalent freelance hourly rate.
Total Annual Revenue Needed:–
Total Billable Hours (Year):–
Base Hourly Rate (Break-even):–
Recommended Rate (w/ Margin):–
*Recommended rate includes a small buffer for business stability.
Why You Can't Just Divide Your Salary by 2080
Many new freelancers make the mistake of taking their old annual salary and dividing it by 2,080 (the standard number of working hours in a year: 40 hours x 52 weeks). If you earned $100,000 as a W-2 employee, this math suggests an hourly rate of roughly $48/hr. This is a financial trap.
As a 1099 contractor, you take on financial burdens that your employer previously covered. To maintain the same standard of living, your hourly rate must account for self-employment taxes, health insurance premiums, retirement contributions, operating expenses, and unpaid time off. This W2 to 1099 Rate Calculator helps you determine your true "fully loaded" hourly rate.
Key Factors in Converting W2 to 1099
Self-Employment Tax: As a W-2 employee, your employer pays half of your FICA taxes (Social Security and Medicare). As a contractor, you pay the full 15.3% yourself. This calculator adds the "employer portion" (approx 7.65%) to your revenue requirement.
Benefits: Health insurance, dental, vision, life insurance, and 401(k) matching contributions are often worth 20% to 30% of a base salary. You must now purchase these directly.
Non-Billable Hours: You cannot bill for 40 hours a week, 52 weeks a year. You spend time on invoicing, marketing, finding new clients, and professional development. Most successful freelancers only bill 25-30 hours per week.
Unpaid Time Off: You do not get paid for holidays, sick days, or vacation. Your hourly rate during working weeks must subsidize the weeks you are not working.
How the Calculation Works
The logic behind this calculator follows a specific "Bottom-Up" approach to pricing:
Total Cash Needs: We take your target salary and add the cash value of benefits you need to replace.
Tax Adjustment: We add the extra tax burden (Self-Employment Tax) you will incur.
Overhead: We add your estimated annual business expenses (laptop, software subscriptions, liability insurance).
Billable Capacity: We calculate your actual billable hours by subtracting vacation weeks and weekly non-billable admin time from the standard work year.
Final Rate: We divide your Total Revenue Requirement by your Total Billable Hours.
Example Scenarios
Scenario 1: The Direct Conversion
If you want to match a $100,000 salary with $15,000 in benefits, taking 4 weeks off, and spending 5 hours a week on admin, your billable hours drop to roughly 1,680 per year. To cover your costs and taxes, you likely need to charge over $85/hr, not the $48/hr derived from simple division.
Scenario 2: The Senior Consultant
Senior roles often have higher benefits packages and more non-billable "strategy" time. A $150,000 salary equivalent often requires a billable rate between $130/hr and $160/hr depending on overhead costs.
function calculate1099Rate() {
// 1. Get Inputs
var salary = parseFloat(document.getElementById('w2Salary').value);
var benefits = parseFloat(document.getElementById('benefitsValue').value);
var expenses = parseFloat(document.getElementById('businessExpenses').value);
var vacation = parseFloat(document.getElementById('vacationWeeks').value);
var adminHours = parseFloat(document.getElementById('adminHours').value);
// Validation: Check for valid numbers
if (isNaN(salary)) salary = 0;
if (isNaN(benefits)) benefits = 0;
if (isNaN(expenses)) expenses = 0;
if (isNaN(vacation)) vacation = 0;
if (isNaN(adminHours)) adminHours = 0;
// 2. Calculate Total Financial Need (Revenue Goal)
// W2 Equivalent Value
var baseNeed = salary + benefits;
// Add Self-Employment Tax Differential
// Employers pay 7.65% of FICA. As 1099, you pay this extra amount.
// We calculate this on the salary portion primarily.
var taxDifferential = salary * 0.0765;
// Total Annual Revenue Required
var totalRevenueNeeded = baseNeed + taxDifferential + expenses;
// 3. Calculate Total Billable Hours
var totalWeeks = 52;
var workingWeeks = totalWeeks – vacation;
// Standard work week is 40 hours
var billableHoursPerWeek = 40 – adminHours;
// Sanity check: cannot have negative hours
if (billableHoursPerWeek < 0) billableHoursPerWeek = 0;
if (workingWeeks 0) {
hourlyRate = totalRevenueNeeded / totalBillableHours;
}
// Recommended Rate (adding a small margin/buffer of 10% for variable income stability)
var recommendedRate = hourlyRate * 1.10;
// 5. Display Results
document.getElementById('results').style.display = 'block';
document.getElementById('totalRevenue').innerText = '$' + totalRevenueNeeded.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('billableHours').innerText = totalBillableHours.toLocaleString('en-US', {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('baseRate').innerText = '$' + hourlyRate.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2}) + ' / hr';
document.getElementById('finalRate').innerText = '$' + recommendedRate.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2}) + ' / hr';
}