$55/hour × 2,080 hours (a full-time employee year) is $114,400. But freelancers do not bill 2,080 hours. At a realistic 1,250 billable hours, $55/hour is $68,750 in revenue; after ~15% business costs and US self-employment tax, it compares to an employee salary of roughly $43,447 with benefits.
| Billable hours / yr | Revenue | After 15% costs | SE tax (US) | ≈ Employee salary equivalent |
|---|---|---|---|---|
| 1,000 h | $55,000 | $46,750 | $6,606 | $34,758 |
| 1,250 h | $68,750 | $58,438 | $8,257 | $43,447 |
| 1,500 h | $82,500 | $70,125 | $9,908 | $52,137 |
| 1,800 h | $99,000 | $84,150 | $11,890 | $62,564 |
Per period at 1,250 billable hours
- Per month: $5,729 revenue
- Per week (48 working weeks): $1,432
- Day rate (8 hours): $440
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.