Business
The hourly rate a freelancer needs to hit an income target after tax and expenses, given billable hours.
The model uses 48 working weeks per year. Enter nonzero weekly hours and a nonzero billable share.
Results update as you type. No calculate button. All calculations run locally in your browser.
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| Quantity | Value |
|---|---|
| Income target + expenses | — |
| Retained-income share (after tax, floored at 5%) | — |
| Billable hours per year | — |
| Revenue needed before tax | — |
| Required hourly rate | — |
Check: revenue needed × (1 − tax rate) − expenses = income target, except when the 5% retained-share floor binds at very high tax rates.
Hourly rate = (annual income target + expenses) ÷ [max(0.05, 1 − tax rate) × weekly hours × 48 × billable share]. Billable hours per year = weekly hours × 48 × billable share. Revenue needed = (income target + expenses) ÷ retained-income share.
Income target $240,000, expenses $30,000, tax 20%, 40 hours/week, 60% billable: numerator = $270,000. Retained share = 1 − 0.20 = 0.80. Billable hours = 40 × 48 × 0.60 = 1,152 hours. Rate = $270,000 ÷ (0.80 × 1,152) = $270,000 ÷ 921.6 = $292.97/hour (292.96875 unrounded). Revenue needed = $270,000 ÷ 0.80 = $337,500; after 20% tax ($67,500) and $30,000 expenses, $240,000 remains. Use Reset example above to reproduce this result.
This simplified model uses a flat tax rate and a fixed 48 working weeks; it is not a jurisdiction-specific tax calculation and does not model progressive brackets, deductions, or self-employment taxes separately. The retained-income share is floored at 5% (max(0.05, 1 − tax rate)) so that extreme tax inputs do not divide by zero or a negative number — at tax rates above 95% the floor binds and the result is a floor-based estimate, not a tax-accurate one. Unpaid time (admin, marketing, holidays beyond the 48-week assumption) is captured only through the billable share.
Because only the billable share of hours earns money, tax takes a share of revenue, and expenses must be covered on top of the income target. All three push the required rate above a simple division.
52 weeks less holidays and leave. It is fixed in this model; if you work fewer weeks, your billable hours fall and the required rate rises.
It stops the retained share (1 − tax rate) from reaching zero or going negative at tax rates of 100% or more. Above a 95% tax rate the floor binds, so treat that result as illustrative only.
No. It uses one flat rate you enter. Real tax depends on brackets, deductions, and jurisdiction — this page is a planning estimate, not a tax calculation.
The required rate rises sharply, because the same annual target must be earned in fewer billable hours. That is the correct signal: either raise the rate, raise the billable share, or lower the target.
Results are estimates only and do not constitute professional advice.