$125/hour × 2,080 hours (a full-time employee year) is $260,000. But freelancers do not bill 2,080 hours. At a realistic 1,250 billable hours, $125/hour is $156,250 in revenue; after ~15% business costs and US self-employment tax, it compares to an employee salary of roughly $98,744 with benefits.
| Billable hours / yr | Revenue | After 15% costs | SE tax (US) | ≈ Employee salary equivalent |
|---|---|---|---|---|
| 1,000 h | $125,000 | $106,250 | $15,013 | $78,995 |
| 1,250 h | $156,250 | $132,812 | $18,766 | $98,744 |
| 1,500 h | $187,500 | $159,375 | $22,519 | $118,492 |
| 1,800 h | $225,000 | $191,250 | $27,023 | $142,191 |
Per period at 1,250 billable hours
- Per month: $13,021 revenue
- Per week (48 working weeks): $3,255
- Day rate (8 hours): $1,000
Assumptions
Business costs 15% of revenue; self-employment tax 15.3% on 92.35% of profit (2026 Social Security wage base $184,500); the employee equivalent divides profit (less the employer-equivalent half of SE tax) by 1.25 to account for benefits an employer would provide — health cover, retirement match, paid leave. Income tax is similar in both cases and not included. Change any assumption in the hourly rate calculator or the take-home pay calculator.