$50/hour × 2,080 hours (a full-time employee year) is $104,000. But freelancers do not bill 2,080 hours. At a realistic 1,250 billable hours, $50/hour is $62,500 in revenue; after ~15% business costs and US self-employment tax, it compares to an employee salary of roughly $39,497 with benefits.
| Billable hours / yr | Revenue | After 15% costs | SE tax (US) | ≈ Employee salary equivalent |
|---|---|---|---|---|
| 1,000 h | $50,000 | $42,500 | $6,005 | $31,598 |
| 1,250 h | $62,500 | $53,125 | $7,506 | $39,497 |
| 1,500 h | $75,000 | $63,750 | $9,008 | $47,397 |
| 1,800 h | $90,000 | $76,500 | $10,809 | $56,876 |
Per period at 1,250 billable hours
- Per month: $5,208 revenue
- Per week (48 working weeks): $1,302
- Day rate (8 hours): $400
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.