1099 Hourly Rate Calculator
Estimate the hourly rate a contractor needs to charge to meet income goals after expenses and self-employment taxes.
Estimate the hourly rate a contractor needs to charge to meet income goals after expenses and self-employment taxes.
25–35% is common for self-employed workers in the US, including self-employment tax.
1,600–1,800 per year is common (allowing for vacations, admin time, and downtime).
No — this is the rate you must charge clients to reach your income goal after expenses and taxes.
Results are estimates for planning purposes. Verify with product labels and local requirements before purchasing materials.
Unlike employees, 1099 contractors must cover their own taxes, benefits, and business expenses. This means the hourly rate you charge must be significantly higher than a comparable employee salary to yield the same take-home income.
The formula is: Required hourly rate = (Desired income + Annual expenses) ÷ (1 − Tax rate) ÷ Billable hours per year
| Desired income | Expenses | Tax rate | Billable hrs | Required rate |
|---|---|---|---|---|
| $60,000 | $5,000 | 30% | 1,600 | $58.49/hr |
| $80,000 | $8,000 | 32% | 1,600 | $81.18/hr |
| $100,000 | $10,000 | 35% | 1,600 | $105.77/hr |
| $120,000 | $12,000 | 37% | 1,400 | $133.57/hr |
| $150,000 | $15,000 | 38% | 1,400 | $164.83/hr |
A common rule of thumb: charge 1.5× to 2× the equivalent employee hourly rate to break even after taxes and benefits. An employee earning $40/hr true cost (salary + benefits) translates to a contractor rate of $60–$80/hr to maintain the same net income.
Always negotiate your rate based on value delivered, not just hours worked. Fixed-project pricing often yields higher effective rates than hourly billing.
25–35% covers most independent contractors. This includes self-employment tax (15.3%) plus federal income tax. High earners or those in high-tax states should use 35–40%.
1,600 hours is a realistic estimate for full-time contractors — accounting for vacations, sick days, non-billable admin time, and business development. 2,000 hours is the theoretical max; 1,200–1,400 is common for part-time consulting.
1099 contractors cover their own self-employment tax (15.3%), health insurance, retirement contributions, equipment, software, liability insurance, and unpaid vacation and sick time. A contractor at $50/hr may net less than an employee at $35/hr after all costs.
Health insurance premiums, retirement contributions, business software subscriptions, equipment depreciation, liability insurance, accounting/bookkeeping fees, professional development, and home office costs.
Add your target salary plus annual expenses, divide by (1 − tax rate) to get gross revenue needed, then divide by billable hours. This calculator does all of that automatically.