2026 · Includes Benefits & SE Tax
What should you charge
to replace your salary?
Going freelance isn't a simple hourly conversion. This calculator accounts for lost benefits, self-employment tax, non-billable time, and business expenses — so your rate actually covers what you're giving up.
1.5–2×
Typical salary-to-rate multiplier
~70%
Realistic billable time as a freelancer
+7.65%
Extra SE tax vs. employee (employer half)
$
/ yr
$
/ yr
%
$
/ yr
%
%
Minimum hourly rate
—
Break-even — no profit
Recommended rate
—
Includes profit margin
Day rate (8 hrs)
—
Annual revenue needed
—
Billable hrs / yr
—
Salary equiv / hr
—
Your rate is —× your equivalent hourly salary rate
What your rate needs to cover
Salary equivalent
—
Benefits to replace
—
SE tax premium
—
Business expenses
—
Profit margin
—
Not sure what your benefits are worth? Use the Benefits Breakdown tab to itemise health insurance, retirement match, paid leave, and more — then paste the total into this calculator.
Enter the value of each benefit your employer currently provides. These disappear when you go freelance — your rate needs to recover them. Unsure? Use the default estimates.
Health insurance (employer portion)
Typical employer contribution: $6,000–$15,000/year for individual coverage. Check your pay stub or HR portal for your actual figure.
$
Employer retirement match
Most common: 3–6% of salary match on 401(k). On an $80k salary with 4% match, that's $3,200/year you'd lose.
$
Paid time off (vacation + sick)
Typical US: 15–25 days PTO. Value = PTO days × your daily salary rate. At $80k/year and 20 PTO days: 20 × ($80k ÷ 260) ≈ $6,154.
$
Employer payroll tax (FICA employer half)
Employers pay 7.65% of your salary as their share of Social Security and Medicare. As a freelancer, you pay both halves (15.3% total) — this is the extra 7.65%.
$
Dental & vision insurance
Employer-sponsored dental and vision typically costs $500–$2,000/year for employee + employer combined. Enter just the employer share.
$
Professional development budget
Many employers cover conferences, courses, books, and certifications. Common range: $500–$5,000/year.
$
Other benefits
Life insurance, disability, commuter benefits, gym membership, equipment, free lunch — anything else your employer provides.
$
Total annual benefits value
$—
As % of salary
—%
Effective total compensation
$—
Copy this total to the Rate Calculator. Paste the "Total annual benefits value" into the "Annual benefits value" field in the Rate Calculator tab to get an accurate minimum rate.
How does your calculated freelance rate compare to market rates — and what salary-to-rate multiplier do freelancers in different roles typically use?
| Salary range (US) | Salary equiv/hr | Min freelance rate | Recommended rate | Multiplier |
|---|---|---|---|---|
| $40,000/yr | $19/hr | $32/hr | $38–$45/hr | ~2x |
| $60,000/yr | $29/hr | $48/hr | $55–$68/hr | ~2x |
| $80,000/yr | $38/hr | $63/hr | $72–$88/hr | 1.9× |
| $100,000/yr | $48/hr | $78/hr | $88–$108/hr | 1.8× |
| $120,000/yr | $58/hr | $93/hr | $105–$128/hr | 1.8× |
| $150,000/yr | $72/hr | $115/hr | $130–$155/hr | 1.8× |
| $200,000/yr | $96/hr | $150/hr | $170–$200/hr | 1.75× |
Assumes 70% billable, $12,000 benefits, $6,000 business expenses, 28% tax rate, 20% profit margin. Rates are illustrative — use the Rate Calculator tab for your specific numbers.
Why the multiplier decreases at higher salaries
At lower salaries, fixed costs (health insurance, business expenses) represent a larger percentage of total income — pushing the multiplier higher. At higher salaries, those same fixed costs are a smaller share, so the multiplier naturally compresses toward 1.7–1.8×. This is why a $40k employee needs almost 2× their salary equivalent to break even, while a $200k employee may only need 1.75×.
Why your freelance rate isn't just salary ÷ 2,080
The most common mistake people make going freelance: dividing their salary by 2,080 (full-time hours per year) and using that as their hourly rate. A $80,000 salary gives $38.46/hr — but if you charge $38/hr as a freelancer, you'll earn significantly less than you did as an employee.
The four factors that force your rate higher
Lost benefits: $10,000–$25,000/year
Health insurance, retirement match, paid leave, dental, vision, and employer payroll taxes disappear. The total is usually 20–35% of your salary in additional value you need to self-fund.
Self-employment tax premium: +7.65%
Employees pay 7.65% FICA. Freelancers pay 15.3% — both halves. On $80,000, that's an extra $6,120/year you pay that your employer was covering.
⏱
Non-billable time: only 60–75% of hours billed
As a freelancer, 25–40% of your working time goes to admin, proposals, marketing, and client communication — unpaid. Your rate must cover 2,080 hours of life on 1,250–1,460 billable hours.
Income gaps and risk premium
No paid sick days. No paid vacation. Gaps between contracts. Your rate needs to build a buffer for all the time you won't be billing. Most experienced freelancers target 170–200 billable days per year, not 240.
The formula
Salary to Freelance Rate
Total needed = Salary + Benefits + SE tax premium + Expenses
Gross up for tax = Total needed ÷ (1 − Tax rate)
Billable hours/yr = 2,080 × Billable %
Minimum rate = Gross up ÷ Billable hours
Recommended rate = Minimum × (1 + Profit margin)
Frequently Asked Questions
How much more should I charge as a freelancer than my salary equivalent?
Typically 1.5–2× your equivalent hourly salary rate. A $80,000/year salary is $38.46/hr — your freelance rate should be $58–$77/hr to break even, and higher with a profit margin. The exact multiplier depends on the value of your benefits, your tax rate, and how much of your time you'll actually be billing. Use the calculator above to get your personalised number.
What benefits should I factor in when going freelance?
The big ones: employer-paid health insurance (commonly $6,000–$15,000/year), employer retirement match (3–6% of salary), paid time off (days × daily salary rate), and the employer half of FICA/SE tax (7.65% of salary). Most people find their total benefits package is worth $12,000–$25,000/year — far more than they expected. Use the Benefits Breakdown tab to itemise everything.
How does self-employment tax affect my freelance rate?
As an employee, you pay 7.65% FICA (Social Security + Medicare). Your employer pays another 7.65%. As a freelancer, you pay both halves — 15.3% total. That's an extra 7.65% of your net income compared to employment. On $80,000, that's $6,120/year more in tax. Your freelance rate needs to recover this, which is why it can't simply equal your salaried hourly equivalent.
What is a realistic billable percentage for a freelancer?
70% is a realistic target for an established freelancer — roughly 28 hours of an eight-hour, five-day working week. The remaining 30% goes to proposals, admin, invoicing, and business development. New freelancers often bill less — 50–60% is common in the first year. If you set your rate assuming 100% billable, your actual take-home will be 25–40% lower than expected.
Do I need a profit margin on top of the minimum rate?
Yes. Your minimum rate is the break-even point — you earn exactly what you gave up. A profit margin (typically 15–25%) gives you buffer for slow months, unexpected costs, equipment upgrades, and reinvestment in your business. Experienced freelancers treat the profit margin as their freelance "raise" — the return on the risk and complexity of running your own business.
Is the salary-to-freelance conversion different outside the US?
The principle is the same everywhere, but the numbers differ. In the UK, National Insurance replaces FICA — employees pay 8% and employers pay 13.8%. In continental Europe, employer social charges are often 25–35% of gross salary. In many countries, healthcare is publicly funded so you won't lose health insurance. The Benefits Breakdown tab lets you customise each item for your specific situation regardless of country.
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