Take-home rate calculator for freelancers
Your quoted rate is revenue. This is what you actually earn per hour.
You do not get paid your rate. You get paid what is left after self-employment tax, federal income tax, state tax and the expenses that rate has to cover.
Put in the rate you quote and how many hours you bill, and this calculator shows your effective hourly rate — the only fair number to compare against a salary.
The number that actually matters
Freelancers talk about their rate as if it were their pay. It is not. A $90 hourly rate is a gross revenue number, before self-employment tax, before income tax, before state tax, and before the business expenses that rate has to cover. The figure that decides your lifestyle is what lands in your pocket per hour you work — and for most freelancers it is 40% to 55% lower than the headline.
This calculator takes the rate you quote, subtracts the real tax stack, and shows the effective hourly rate you actually earn. That is the only number worth comparing to a salaried offer.
Why the gap is bigger than people expect
Three layers stack on top of each other. First, self-employment tax takes 15.3% of 92.35% of your profit — roughly 14.1% of the whole. Second, federal income tax lands on what is left, at your marginal bracket. Third, state tax (where it applies) takes a further slice of the same profit.
For a freelancer billing $90 an hour across a full 1,920-hour year, gross revenue is about $173,000. After expenses and the combined tax load, take-home is often in the $90,000–$110,000 range — an effective rate around $48 to $57 an hour, not $90. The headline rate is real, but it is a revenue number wearing a pay-rate costume.
What changes the effective rate
Two levers move it more than anything else. The first is billable hours. The effective rate divides take-home by the hours you actually work, so a rate that sounds thin across 1,500 billable hours can be generous across 1,900. This is why the earlier hourly-rate calculator pushes you to raise the billable share before raising the price.
The second is deductible expenses and retirement contributions. Because both reduce taxable profit, every dollar spent on a legitimate business cost or a Solo 401(k) contribution is partially refunded by the tax it avoids. At a 35% combined rate, a $10,000 contribution costs about $6,500 out of pocket — which is exactly why the retirement calculator and this one tell the same story from different angles.
The comparison that ends arguments
The most useful output here is the effective hourly rate next to a salaried equivalent. A $120,000 salary, after the employee half of payroll tax and benefits, is worth a certain take-home per hour worked. If this calculator shows your $90 freelance rate producing a lower effective rate than that salaried job, then — purely on money — the salary wins, and you are paying for the freedom rather than profiting from it. If your effective rate clears the salary comfortably, the premium is real.
This is also the calculator to show before a rate negotiation. "I need to charge $X" is weak. "At $X my effective hourly rate after tax is $Y, which is what this role is actually worth to me" is not.
The caveat that protects you
The state tax line here is a flat percentage of profit, which is a simplification — states vary in what they tax and how they treat pass-through income, and some offer a deduction that lowers the effective rate. The federal side uses the standard deduction and ignores the QBI deduction, which for many freelancers reduces tax further. Treat the output as a conservative, slightly-pessimistic estimate, then confirm with your own return or an accountant before making a life decision on it.
Estimate for 2025, federal plus a flat state rate. Ignores the QBI deduction, credits, itemized deductions and any W-2 withholding. See the disclaimer and confirm with the IRS Topic 554 — Self-Employment Tax.
Frequently asked questions
What is my effective hourly rate if I charge $90?
It depends on billable hours and expenses, but a common result is an effective rate around $48–$57 an hour. Gross revenue at $90 across roughly 1,900 billable hours is about $170,000; after self-employment tax, federal income tax and state tax, take-home typically lands near $95,000–$110,000, which divided by hours worked gives the effective figure. The calculator makes it exact for your own numbers.
Why is my effective rate so much lower than my quoted rate?
Because the quoted rate is gross revenue, not pay. Self-employment tax (~14% of profit), federal income tax at your bracket, and state tax all come off it, and business expenses come off the gross before any of that. The effective rate divides what you keep by the hours you actually work, which is the only fair comparison to a salary.
Does raising my rate or working more hours help more?
Both help, but raising billable hours helps more than raising the rate, because the effective rate is take-home divided by hours worked. Going from 1,500 to 1,900 billable hours at the same price lifts the effective rate substantially, whereas a small rate increase is partly eaten by the higher tax it triggers. The earlier hourly-rate calculator shows this directly.
How much do business expenses really save me?
A legitimate deductible expense saves you roughly your combined marginal rate. At a 35% combined federal and state rate, a $10,000 expense or retirement contribution reduces your tax by about $3,500, so its real cost is about $6,500. This is why tracking expenses and funding a retirement plan are themselves tax strategies, not just bookkeeping.
Should I compare this to a salary before negotiating a rate?
Yes. The effective hourly rate is the honest basis for a rate decision, because it reflects what you keep per hour after tax. If your effective rate at a given price sits below a comparable salaried role, the difference is the premium you are being paid for the risk and admin of freelancing — useful to know before you under- or over-price.
Is the state tax estimate accurate?
It is a flat percentage of profit, which is a simplification. States differ in what they tax, many offer a pass-through or itemized deduction that lowers the effective rate, and a few have no income tax at all. Enter 0 if your state has none; otherwise treat the state line as approximate and confirm against your state return.