# How the Freelance Rate Calculator works: method, assumptions and sources

The calculator works backward from the take-home pay you want to the profit and revenue you need, then divides by your billable hours. This page documents every step, the values used for 2026 and what is not modeled.

## The calculation in order

- **Need from the business:** take-home goal × 12, minus take-home income from other sources.
- **Profit needed:** the smallest yearly profit that leaves that take-home pay after federal income tax, self-employment tax, state tax, health insurance, retirement and other savings. Taxes depend on profit, so the calculator solves for it by bisection.
- **Revenue needed:** (profit + business expenses) × (1 + buffer).
- **Hourly revenue:** revenue minus other revenue that is not billed by the hour.
- **Hourly rate:** hourly revenue ÷ billable hours, where billable hours = (working days − days off) × hours per day × billable share.

## Tax values used for 2026

| Item | Value |
| --- | --- |
| Standard deduction (single / joint) | $16,100 / $32,200 |
| Federal brackets (single) | 10% up to $12,400; 12% up to $50,400; 22% up to $105,700; 24% up to $201,775; 32% up to $256,225; 35% up to $640,600; 37% above |
| Self-employment tax | 12.4% Social Security + 2.9% Medicare on 92.35% of net profit |
| Social Security wage base | $184,500 |
| Additional Medicare Tax | 0.9% above $200,000 (single) / $250,000 (joint) |
| QBI deduction | 20%, phase-out above $201,750 / $403,500 taxable income |

        The same values are available as JSON in `rates.json`.

## How other income is treated

Other income rows are typed. Own revenue that is not billed by the hour counts as business profit. W-2 wages and other taxable income raise your tax bracket; the tax on your freelance profit is the tax on everything minus the tax on that other income alone, and wages use up part of the Social Security wage base. Take-home income covers part of your goal without any tax effect.

## What is not modeled

- Tax credits, dependents and itemized deductions
- Head of household and married filing separately
- Net investment income tax and alternative minimum tax
- State-specific rules (you enter an effective rate instead)
- QBI wage and property limits and special rules for specified service businesses with employees
- Retirement contribution limits (see IRS Publication 560)

## How the numbers are checked

The tax functions are tested against reference values from an independent exact-fraction calculation, including bracket edges, the wage base, the Additional Medicare Tax and the QBI phase-out. The reverse calculation is tested by running the result forward again: the take-home pay must match the goal.

## Privacy

All calculations run in your browser. Your inputs are not sent to a server and are stored on your device only if you agree in the cookie notice.

## Frequently asked questions

### Is the Freelance Rate Calculator accurate?

It applies the 2026 federal rules for single filers and married couples filing jointly and a state rate that you enter. It is a simplified estimate for planning prices, not a tax return.

### How often are the tax values updated?

Once a year when the IRS publishes the new inflation adjustments. The date of the last review is shown on each page.

## Sources

- [IRS: Tax inflation adjustments for tax year 2026](https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill)
- [IRS Rev. Proc. 2025-32: 2026 inflation adjustments](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf)
- [IRS: Self-employment tax (Social Security and Medicare taxes)](https://www.irs.gov/businesses/small-businesses-self-employed/self-employment-tax-social-security-and-medicare-taxes)
- [IRS: Qualified business income deduction](https://www.irs.gov/newsroom/qualified-business-income-deduction)
- [IRS: Estimated taxes](https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes)

Updated October 2026. Simplified estimate, not tax or legal advice.