$25/hour × 2,080 hours (a full-time employee year) is $52,000. But freelancers do not bill 2,080 hours. At a realistic 1,250 billable hours, $25/hour is $31,250 in revenue; after ~15% business costs and US self-employment tax, it compares to an employee salary of roughly $19,749 with benefits.
| Billable hours / yr | Revenue | After 15% costs | SE tax (US) | ≈ Employee salary equivalent |
|---|---|---|---|---|
| 1,000 h | $25,000 | $21,250 | $3,003 | $15,799 |
| 1,250 h | $31,250 | $26,562 | $3,753 | $19,749 |
| 1,500 h | $37,500 | $31,875 | $4,504 | $23,698 |
| 1,800 h | $45,000 | $38,250 | $5,405 | $28,438 |
Per period at 1,250 billable hours
- Per month: $2,604 revenue
- Per week (48 working weeks): $651
- Day rate (8 hours): $200
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.