What utilisation rate is realistic?

Established freelancers bill 60–75% of available hours. New freelancers should plan for 40–55% while pipeline is still building.

How much should I set aside for tax?

US sole proprietors commonly reserve 25–35% covering federal, state and self-employment tax. Canadian sole proprietors typically reserve 25–30% plus GST/HST collected.

Do I charge sales tax on top?

In Canada, once you exceed $30,000 in revenue over four quarters you must register for and charge GST/HST. In the US, most services are exempt but some states tax them.

Should my rate be higher than an employee hourly wage?

Yes. A 25–50% premium is normal because you carry tax, benefits, downtime and equipment yourself.

Freelance & Contractor Rate Calculator

Price contract work with tax, benefits and downtime built in.

Going independent means the salary you used to earn is no longer a fair comparison. As a contractor you cover your own income tax and self-employment or CPP contributions, your own health and retirement benefits, your own equipment, and every unpaid hour between contracts. This calculator builds all of that into a rate you can defend in a negotiation.

Enter the salary you want to replace, the percentage you need to set aside for tax, the annual cost of benefits and equipment you now pay yourself, and your realistic utilisation — the share of your working hours that are actually billed to a client.

The result is the hourly rate that leaves you whole, along with the day rate and the annual gross revenue it implies. Freelancers in the US should account for self-employment tax of roughly 15.3% on top of income tax; Canadian sole proprietors pay both halves of CPP. Both are why an equivalent contract rate is typically 25–50% above the hourly value of a salary.

Your numbers

Salary you want to replace

Tax set-aside

Annual benefits, insurance & equipment

Working weeks per year

Hours available per week

Utilisation (share of hours billed)

Contract hourly rate

$109.16

🇺🇸 US · USD

Gross revenue needed: $130,555.56
Tax set aside per year: $36,555.56
Billable hours per year: 1,196
Day rate (8 hours): $873.28
Weekly invoice at full utilisation: $2,838.16

Estimates only. Results from this calculator are for general informational purposes and are not tax, legal, accounting or financial advice. Rates change and individual circumstances vary — confirm figures with the CRA, the IRS, your state or provincial authority, or a licensed professional before acting on them.

How it's calculated

Gross revenue needed = (Salary target + Benefits & equipment) ÷ (1 − Tax set-aside %)
Billable hours = Weeks × Hours per week × Utilisation %
Contract hourly rate = Gross revenue needed ÷ Billable hours

Dividing by (1 − tax rate) grosses the figure up so that what remains after tax still meets your target — adding the tax percentage on top would fall short.

Understand the numbers

What to charge as a freelancer: turning a salary into an hourly rate

Frequently asked questions

What utilisation rate is realistic?: Established freelancers bill 60–75% of available hours. New freelancers should plan for 40–55% while pipeline is still building.
How much should I set aside for tax?: US sole proprietors commonly reserve 25–35% covering federal, state and self-employment tax. Canadian sole proprietors typically reserve 25–30% plus GST/HST collected.
Do I charge sales tax on top?: In Canada, once you exceed $30,000 in revenue over four quarters you must register for and charge GST/HST. In the US, most services are exempt but some states tax them.
Should my rate be higher than an employee hourly wage?: Yes. A 25–50% premium is normal because you carry tax, benefits, downtime and equipment yourself.

Related calculators

Hourly Rate CalculatorConvert a target salary into an hourly billing rate.Net Profit CalculatorRevenue minus every cost — the real bottom line.GST/HST CalculatorCombined GST, HST, PST and QST by province.US Sales Tax CalculatorState base rates plus your local district rate.