Reverse Calculator

What Should You Charge per Hour?

To take home $5,000 a month billing 120 hours, with $800 overhead and a 25% effective tax rate, you must charge about $58.33/hour and bill roughly $7,000 gross. Self-employment tax alone (15.3%) adds about $1,071.

Results

Visualization

Cashbizly provides illustrative business estimates only. Results depend on your inputs and assumptions and are not accounting, tax, or legal advice. Consult a CPA or financial advisor before major decisions. Tax-year figures (mileage, QBI, SEP, etc.) are labelled by year and should be verified at IRS.gov.

How It Works

Gross Needed = (Take-Home + Overhead) / (1 - Tax Rate). Rate = Gross / Billable Hours. The 15.3% self-employment tax (12.4% Social Security + 2.9% Medicare) applies to net self-employment earnings and is built into the effective rate. This is the contractor's reverse of 'what can I afford to charge'.

What Should You Do?

Scenario 1: a designer wanting $8k take-home in 100 billable hours at 30% tax needs $114.29/hour. Scenario 2: raising billable hours from 100 to 140 lets you cut rate to $81.63 for the same income. Scenario 3: if you underestimate tax and use 15%, you short yourself ~$580/month.

Frequently Asked Questions

Why include self-employment tax?

Unlike W-2 employees, 1099 contractors pay both halves of payroll tax (15.3%) on net earnings. Ignoring it is the top reason freelancers underprice.

What if my hours vary?

Use a realistic average of billable (not clock) hours. Non-billable admin time should be covered by a higher rate, not ignored.

Should I charge this rate to every client?

Use it as your floor. Specialist or rush work can command more; rookie or volume work may need less, but never below this number consistently.

Authoritative References

IRS — Self-Employment Tax — 15.3% SE tax on net earnings from self-employment.
IRS — Estimated Taxes — Quarterly estimated tax for the self-employed.