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Free tool · US and Canada · 2026

Hourly rate calculator

For freelancers, consultants and contractors: start from the income you want and work back to the hourly rate, day rate and retainer that pays for it. Runs in your browser; nothing is saved.

Your year

Where do you work?

$a year

Before income tax, like a salary. Include what you want to put away for retirement.

$a year

Software, insurance, equipment, phone, office or co-working, accountant, health cover you pay yourself.

weeks

Vacation, public holidays, sick days. Six weeks is about 4 weeks of vacation plus holidays.

hours
%

Selling, admin, invoicing and learning are not billable. 50 to 75% is common.

%

The rate to charge

Income you want

$75,000.00

Self-employment tax on the profit

2026 rates

$12,340.87

Business expenses

$12,000.00

Revenue you need in a year

$99,340.87

Billable hours in a year

46 weeks × 40 hours × 65% billable

1,196

Break-even hourly rate

Covers income, expenses and tax, nothing more

$83.06

Hourly rate to charge

With a 10% buffer

$91.37

Day rate (8-hour day)

At 65% billable, about 5.2 billed hours a day

$475.12

Monthly retainer equivalent

One client taking all your billable time

$9,106.54

Self-employment tax at 2026 rates (15.3% on 92.35% of profit, Social Security part up to $184,500). Income tax is not included, so think of the income figure as a pre-tax salary. A planning estimate, not tax advice.

Billing by the hour? AcboBooks records time by customer and pulls unbilled billable time onto an invoice, so the hours you work get billed. See time tracking in AcboBooks.

How the hourly rate is worked out

  1. Billable hours = (52 − weeks off) × hours a week × billable share.
  2. Profit needed = the income you want + self-employment tax (US) or CPP (Canada) on that profit. The tax is charged on the profit itself, so the calculator finds the profit that still leaves your income after the tax.
  3. Revenue needed = profit needed + business expenses.
  4. Break-even rate = revenue needed ÷ billable hours.
  5. Rate to charge = break-even rate × (1 + buffer).

Worked example (United States)

A bookkeeper wants to pay herself $75,000 a year and has $12,000 of business expenses. She takes 6 weeks off, works 40 hours a week and bills 65% of them: 46 × 40 × 65% = 1,196 billable hours. Self-employment tax on the profit she needs is about $12,341 (15.3% of 92.35% of $87,341), so the business must make $87,341 of profit on $99,341 of revenue. $99,341 ÷ 1,196 = $83.06 an hour to break even, or $91.37 with a 10% buffer. That is about $475 for an 8-hour day at 65% billable.

Worked example (Canada)

The same numbers in Canada: both halves of CPP on the profit needed come to about $9,231 at 2026 rates (11.9% on earnings between $3,500 and $74,600, then 8% CPP2 up to $85,000). Revenue needed is about $96,231, or $80.46 an hour before the buffer and $88.51 with it. If you charge GST/HST, it goes on top of the rate: it is not your income.

Ways to make the number work

  • Raise the billable share. Going from 60% to 70% billable can be worth more than a price rise. Batch admin, reuse templates, and invoice from your time records rather than from memory.
  • Price the job, not just the hours, for work you know well. Use the markup and margin calculator when you resell materials or a subcontractor's time.
  • Check the floor each year. Expenses and tax rates change; so should your rate.
  • Set money aside each time you are paid. The self-employment tax calculator shows the quarterly payments.

Sources

Rates as of October 25, 2026.

Questions

How do I calculate my freelance hourly rate?

Add the income you want to pay yourself, your business expenses and the self-employment tax (US) or CPP (Canada) you will owe on the profit. Divide by the hours you can actually bill in a year: weeks worked × hours a week × the share of time that is billable. Then add a buffer for slow months. With $75,000 of income, $12,000 of expenses, 46 working weeks of 40 hours and 65% billable, a US freelancer needs about $83 an hour to break even and about $91 with a 10% buffer.

How many billable hours are there in a year?

Far fewer than the 2,080 hours of a full-time job. After vacation, public holidays and sick days, most people work 46 to 48 weeks. Then selling, quoting, invoicing, bookkeeping and learning take a quarter to a half of the working week. 1,000 to 1,400 billable hours a year is a realistic range for many freelancers.

Why is a freelance rate so much higher than an employee's hourly wage?

An employee's employer pays half of Social Security and Medicare (or CPP), provides the computer and software, pays for holidays and sick days, and fills every hour with paid work. As a freelancer you pay all of that yourself and are paid only for billable hours. That is why a freelance rate well above the equivalent wage is normal.

Does this include income tax?

No. The income you enter is treated like a salary before income tax, because income tax depends on your filing status, province or state, deductions and other income. It does add US self-employment tax (15.3% on 92.35% of profit) or both halves of CPP (11.9%, plus 8% CPP2) at 2026 rates, because an employer would pay half of those for a salaried employee.

Should I charge by the hour, by the day or by the project?

Work out the hourly figure first either way: it is your floor. A day rate is the hourly rate times the hours you bill in a day. A project price is your estimate of the hours times the rate, plus a margin for the risk that it takes longer. Value-based pricing can be higher, but should not fall below this number.

What expenses should I include?

Everything the business pays for in a year: software subscriptions, equipment (spread over its life), the business share of phone and internet, insurance, professional fees and memberships, office or co-working, marketing, training, and health cover or retirement savings you pay yourself if you did not include them in the income figure.

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Related

A planning estimate, not tax or financial advice.

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