Contractor Income Calculator
An hourly rate is not a salary. Multiply $75 by 40 hours and 52 weeks and you get $156,000, but contractors rarely bill every hour of the year, and the tax bill lands differently when you are the employer too. This calculator converts an hourly rate into real take-home income, and it also runs the question backwards: tell it the annual income you want to keep, and it tells you the hourly rate you must charge.
Use the forward mode to see what a rate is worth, or the reverse mode to price your services from your income goal.
Forward: what your hourly rate is worth. Reverse: the rate you must charge to hit an income goal.
Planning estimates only. The single tax rate is a simplification: real taxes are progressive, and US contractors also owe self-employment tax and any state tax. Not tax advice.
Worked example: $75 an hour
Enter $75 hourly, 8 hours a day, 5 days a week, 50 billable weeks, 25% tax. Daily: $600. Weekly: $3,000. Monthly: $3,000 × 4.33 = $12,990.00. Annual gross: 3,000 × 50 = $150,000.00. Tax: $37,500.00. Annual net: $112,500.00. In reverse mode, a $100,000 take-home target at 30% tax over 40 hours × 50 weeks needs 100,000 / 0.70 = $142,857.14 of billings, which is $71.43/hour. Both verified against the tool.
The 1,800-hour reality check
The classic mistake is multiplying by 2,080 hours (40 × 52). Contractors do not bill 52 weeks: subtract holidays, vacation, sick days, gaps between contracts, and the unbilled hours spent quoting, invoicing, and chasing payment. 1,800 billable hours a year is a realistic starting point for full-time contracting; at $75/hour that is $135,000 of gross billings, not $156,000. Enter your honest billable weeks in the calculator rather than 52.
Contract rate vs salary: the 1.3 to 1.5x rule
A contract rate should run about 1.3 to 1.5 times the hourly equivalent of a salary to break even, because contractors pay both halves of payroll tax (15.3% self-employment tax in the US vs 7.65% as an employee) and fund their own health insurance, retirement, and time off. A $100,000 salary is roughly $48/hour, so a fair contract rate starts near $65 to $70/hour. Worked comparison: a $45/hour contract looks like $93,600 a year (45 × 40 × 52), but with 4.6 unpaid weeks it bills $85,320, and after roughly $6,500 of extra payroll tax and $9,000 of self-funded benefits it matches a salary of only about $69,800. To truly match an $85,000 salary, the rate needs to be around $55/hour.
What competing calculators miss
The ranking tools split into two camps that never meet: forward calculators that turn a rate into income, and reverse calculators that turn an income goal into a rate. The reverse-only tools are mostly single-market (one is Canada-specific) and the forward ones rarely mention billable-hour reality. None of them put the salary-equivalence math in front of you. This calculator does both directions in one tool, defaults to honest billable weeks instead of 52, and the content walks through the $45/hr-vs-$85k comparison so the number means something.
Frequently asked questions
How do I convert my hourly rate to annual income?
Multiply hourly rate × hours per day × days per week × billable weeks per year. $75 × 8 × 5 × 50 = $150,000 gross; after 25% tax, $112,500 net.
What hourly rate do I need to take home $100,000?
At 30% tax and 2,000 billable hours a year, you need about $71.43/hour. Use the reverse tab with your own numbers.
How many billable hours should I assume per year?
1,800 is a realistic full-time starting point after holidays, vacation, sick days, gaps, and unbilled admin. 2,080 assumes you bill every hour of a 52-week year, which almost nobody does.
Is a $75/hour contract better than a $120,000 salary?
Often roughly equal. At 1,800 billable hours $75/hour is $135,000 gross, but after both halves of payroll tax and self-funded benefits, the gap mostly disappears. Run the forward mode and compare against the 1.3 to 1.5x rule.
What percentage of a contract rate goes to taxes?
Most US contractors pay 25 to 32% of gross in combined federal, self-employment, and state tax. The tool uses one flat rate as a planning simplification.
Does the calculator include self-employment tax?
Not separately: US contractors owe 15.3% self-employment tax on top of income tax. Fold it into the tax-rate field (for example, 25% income tax + 15.3% SE tax ≈ 40% combined, before deductions).