$20/hour × 2,080 hours (a full-time employee year) is $41,600. But freelancers do not bill 2,080 hours. At a realistic 1,250 billable hours, $20/hour is $25,000 in revenue; after ~15% business costs and US self-employment tax, it compares to an employee salary of roughly $15,799 with benefits.
| Billable hours / yr | Revenue | After 15% costs | SE tax (US) | ≈ Employee salary equivalent |
|---|---|---|---|---|
| 1,000 h | $20,000 | $17,000 | $2,402 | $12,639 |
| 1,250 h | $25,000 | $21,250 | $3,003 | $15,799 |
| 1,500 h | $30,000 | $25,500 | $3,603 | $18,959 |
| 1,800 h | $36,000 | $30,600 | $4,324 | $22,751 |
Per period at 1,250 billable hours
- Per month: $2,083 revenue
- Per week (48 working weeks): $521
- Day rate (8 hours): $160
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.