How Much Should I Charge as a Freelancer? Work Out Your Real Rate Floor

DRAFT — NOT CPA/LEGAL-REVIEWED — in Compliance HOLD until a qualified CPA/legal reviewer is engaged; do not describe as reviewed.

Educational only. This guide explains a system; it is not personal advice for your situation. Before you act on any tax or retirement figure here, consult a tax professional.

Short answer: Take the salary you want to replace, then add tax, benefits, business expenses, and the hours you will never bill — and divide by the hours you will actually bill, not 2,080. In the worked example below, an $80,000 lifestyle needs about $113 an hour at 1,200 billable hours a year. The naive answer, $80,000 ÷ 2,080, is $38 an hour. That gap is why so many freelancers work full weeks and still feel broke.

Key takeaway. Divide by the hours you will actually bill, not 2,080. In the worked example, an $80,000 lifestyle needs about $113 an hour at 1,200 billable hours.

Watch out. A rate below your floor is a job that costs you money, however busy it keeps you.

Who this is for: You are setting your first rate, or raising one that has quietly stopped covering your life. Maybe you left a salaried job and divided your old salary by 2,080 hours, and now every month feels tighter than the job did.

Who this is not for: This is a floor, not a market rate. It tells you the lowest you can charge without going backwards. What clients in your field will actually pay is a separate question, and this guide does not pretend to answer it with a table — market rates go stale fast, and yours depends on your work.

The naive mistake, spelled out

Salary ÷ 2,080 assumes four things that are all false for a freelancer:

That you bill 40 hours a week, 52 weeks a year. You will not. Selling, admin, chasing a late invoice, and holidays all eat hours you cannot bill.
That someone else pays half your Social Security and Medicare. Nobody does. You pay the full 15.3% self-employment tax (Guide B1).
That someone else covers health insurance, paid leave, and a retirement match. You cover all of it now.
That you have no business expenses. Software, equipment, a phone, an accountant — those come out of your rate too.

Miss any one of those and your rate is too low. Miss all four, which the naive division does, and it is not even close.

The floor, built step by step

Work with one fictional freelancer, Dana, a single filer in 2026. She wants $80,000 a year to live on after tax, plus $12,000 a year to replace the benefits her old job provided (health coverage and retirement saving, as a planning allowance — not a quote for any plan). Her business expenses run $8,000 a year. She can realistically bill 1,200 hours a year: about 25 billable hours a week for 48 weeks, with the rest going to everything else.

The tricky part is tax, because tax depends on the gross income, and the gross income depends on the tax. The honest way through is to solve it in a loop — the linked calculator does this — and check the answer backwards. Here is the checked result:

Line	Amount
Spending money wanted, after tax	$80,000
Benefits replacement allowance	$12,000
Business expenses	$8,000
Gross billings needed (solved)	$135,123
Net profit (gross − expenses)	$127,123
SE tax (15.3% on 92.35% of profit)	$17,961.91
Half of SE tax (deductible)	−$8,980.96
Adjusted gross income	$118,142.04
Less: 2026 standard deduction (single)	−$16,100
Taxable income	$102,042.04
Federal income tax (10%/12%/22% brackets)	$17,161.25
Total federal tax	$35,123.16
Check: profit − total tax	$91,999.84 ≈ $80,000 + $12,000 ✓

Now divide: $135,123 ÷ 1,200 billable hours = $112.60 an hour. Call it $113.

Compare that with the naive $38.46. The naive rate does not fail by a little. It fails by nearly three times. And note what the $113 buys: it is not a luxury rate. It buys the same $80,000 lifestyle Dana had, plus the benefits she used to get for free, with tax paid. Anything below it means she is quietly subsidising her clients out of her own future.

What happens when the hours change

The gross needed stays roughly the same — Dana still needs the same life — so the rate moves with billable hours:

Billable hours a year	Rate floor
1,000	$135.12
1,200	$112.60
1,600	$84.45

This is the lever most rate guides skip. Two freelancers with identical costs and identical lifestyles need very different rates if one bills 1,000 hours and the other bills 1,600. Be honest about your billable hours. Counting 2,080 is how you end up working evenings to make a rate that was never real.

Two more things that move the floor. A higher profit pushes more income into the 22% bracket and lifts the tax bill, which lifts the rate. And state tax, excluded here, lifts it further in most states — add your state's share before you quote anyone.

Using the floor in real life

First, the floor is a walk-away line. A project priced below it is not "exposure" or "a foot in the door." It is work that costs you money once tax and benefits are counted. Saying no to it is not arrogance; it is arithmetic.

Second, the floor is not the price. Once you know you cannot go below $113, you can price above it for skill, urgency, or a project rate — and you can convert it: a 20-hour project at your floor is $2,260 before any project premium. The floor stops you from accidentally discounting below survival. It does not stop you from charging more.

Third, revisit it yearly, and whenever something big changes: a tax year rolls over, your health costs jump, or your billable hours fall because you took on work that eats admin time. A rate set in 2024 and never revisited is a pay cut you gave yourself.

What this guide deliberately does not do

It does not tell you what designers, writers, or developers "should" charge. Those tables exist everywhere, they disagree with each other, and they go out of date. It does not promise that clients will pay your floor — they might not, and then the honest conclusion is that the work mix has to change, not that the maths is wrong. And it does not cover project, retainer, and hourly pricing models — that is Guide D2, which starts where this one ends: once you know the floor, which model you charge it under.

Checklist

Target after-tax lifestyle figure written down (not a vague "enough").
Benefits replacement allowance estimated (health, retirement, leave).
Business expenses totalled from last year, not guessed.
Billable hours estimated honestly (billable, not working).
Floor computed with tax grossed up — via the calculator, not salary ÷ 2,080.
Floor revisited at least once a year.

What to do next

Build your own rate floor from the steps in this guide.
Run your numbers through the rate calculator.
Consult a tax professional before acting on any tax figure in your rate.

Sources

IRS Publication 334, Tax Guide for Small Business (SE tax on net profit).
IRS Revenue Procedure 2025-32 (2026 standard deduction $16,100 single; brackets 10% to $12,400, 12% to $50,400, 22% to $105,700).
Social Security Administration, 2026 wage base ($184,500; Dana's profit is below it, so the full 12.4% applies).
Guide B1 on this site (SE-tax and set-aside maths used in the gross-up).

Source links: IRS 2026 inflation adjustments, Revenue Procedure 2025-32 · SSA 2026 contribution and benefit base, $184,500 · IRS Publication 505 (estimated tax) · IRS Publication 334

Educational only. Tax figures are for 2026 and your situation may differ — consult a tax professional before relying on any figure here. Benefits figures in the example are planning allowances, not quotes. Reviewed 25 Oct 2026.

Before you act: tax and retirement rules change, and your situation has details a guide cannot see. For any figure you plan to file, claim, or contribute on the basis of this page, consult a tax professional first.

Related guides and tools

Dated assumptions: draft content as checked 25 October 2026; tax and retirement figures are for tax year 2026 where stated. Verify current-year limits, rates, and deadlines before acting, as the IRS adjusts them annually.

Educational only. These numbers are estimates from the assumptions shown on the page — not advice for your situation, and not a prediction of what you'll owe or save. Tax and retirement rules change. Consult a tax professional before you act on a tax or retirement figure.