$45/hour × 2,080 hours (a full-time employee year) is $93,600. But freelancers do not bill 2,080 hours. At a realistic 1,250 billable hours, $45/hour is $56,250 in revenue; after ~15% business costs and US self-employment tax, it compares to an employee salary of roughly $35,548 with benefits.
| Billable hours / yr | Revenue | After 15% costs | SE tax (US) | ≈ Employee salary equivalent |
|---|---|---|---|---|
| 1,000 h | $45,000 | $38,250 | $5,405 | $28,438 |
| 1,250 h | $56,250 | $47,812 | $6,756 | $35,548 |
| 1,500 h | $67,500 | $57,375 | $8,107 | $42,657 |
| 1,800 h | $81,000 | $68,850 | $9,728 | $51,189 |
Per period at 1,250 billable hours
- Per month: $4,688 revenue
- Per week (48 working weeks): $1,172
- Day rate (8 hours): $360
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.