How the calculation works
- Revenue needed = (target take-home income + business expenses) ÷ (1 − tax rate).
- Billable days = working days × (1 − non-billable share).
- Minimum day rate = revenue needed ÷ billable days, plus the safety margin.
With the default figures: ($80,000 + $6,000) ÷ 0.70 = $122,857 of revenue needed. With 25% of 230 days spent on non-billable work, 173 days are left to bill: $122,857 ÷ 173 = $710 a day, or $781 once the 10% safety margin is added.
About the tax rate
The 30% default is an order of magnitude for a first estimate, not an official rate. In the US, the self-employment tax alone is 15.3% (12.4% for Social Security, 2.9% for Medicare), and federal income tax, plus state income tax in most states, comes on top. For 2026, the Social Security part only applies to the first $184,500 of combined earnings, and part of the self-employment tax is deductible. Outside the US, rules are completely different. Replace the default with your own effective rate.
This day rate is a floor: it covers your income, your costs and the quiet months. The rate you actually quote depends on your market, your specialty and the value you bring to the client.
Frequently asked questions
How do I calculate my freelance day rate?
Start from the take-home income you want for the year, add your business expenses, and gross the total up for taxes to get the revenue you need. Then divide that revenue by the number of days you can actually bill. Dividing by every working day in the year almost always gives a rate that is too low, because sales, admin and gaps between projects eat into billable time.
How many billable days does a freelancer have in a year?
A year has about 260 weekdays. Take out around 10 public holidays and four weeks of vacation and you are left with roughly 230 working days. Part of that time goes to finding clients, invoicing and training, so the number of days actually billed is usually well below 200. The calculator removes non-billable time with the percentage you enter.
What tax rate should a US freelancer plan for?
Self-employed people in the US pay self-employment tax, which the IRS sets at 15.3% (12.4% for Social Security and 2.9% for Medicare), on top of federal and, in most states, state income tax. Your real total depends on your income, your state and your deductions, so the 30% default is only an order of magnitude: replace it with the figure from your accountant or last year's return.
How do I turn a day rate into an hourly rate?
Divide the day rate by the number of hours you bill in a day. A $781 day rate over 8 billable hours is about $98 an hour. If you bill fewer hours per day, the hourly rate has to go up to bring in the same revenue.