How to Calculate Your Freelance Rate in 2026

The problem with guessing your rate

When you pick a number because it "sounds fair," you're ignoring taxes, unpaid admin time, software costs, and the weeks you won't be billing. That's why you feel busy but broke.

The freelance rate formula

Your minimum hourly rate should cover:

1. Target income — what you need to take home after tax
2. Business expenses — software, equipment, insurance
3. Taxes — self-employment tax + income tax (plan for 25–35%)
4. Profit margin — buffer for slow months and growth
5. Billable hours only — not every hour is client work

Example: $75,000 target income

• 30 billable hours/week, 4 weeks off = 1,440 billable hours/year
• $5,000 annual expenses
• 28% effective tax rate
• 15% profit margin
• Result: ~$89/hour minimum

Common mistakes

• Using 40 hours/week as billable (realistically it's 20–30)
• Forgetting self-employment tax (15.3% in the US)
• Not raising rates annually
• Charging the same rate for rush work and retainers

After you know your rate — invoice at it

Knowing your rate means nothing if you don't bill clients properly. SideLedger lets you create professional invoices in under a minute and download as PDF.

Create an Invoice →