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Salary to Freelance Rate: What You Need to Charge to Replace Your Paycheck
The short answer: a freelance rate needs to replace your salary and your benefits and the employer's share of payroll tax, spread over fewer billable hours. For a $65,000 salary with average benefits, that's about $77 an hour, roughly 2.5 times the $31.25 you get from dividing by 2,080 hours.
Why a salary ÷ 2,080 isn't your freelance rate
An employer pays more than your salary. According to the U.S. Bureau of Labor Statistics, benefits made up 30% of total compensation for private-industry workers in June 2026: $14.07 of $46.89 per hour worked (BLS). That's about 43% on top of wages. Benefits include paid leave, insurance, retirement contributions, and legally required items like the employer's share of Social Security and Medicare.
As a freelancer you pay for all of it yourself, and you also bill fewer hours than you work. That's why the general method in how to set your freelance rate starts from what you need, not what you were paid.
Salary to freelance rate calculator
43% is the BLS private-industry average (benefits ÷ wages). Lower it if your job had lighter benefits, raise it if your benefits were generous.
Worked example: $65,000 salary
| Step | Amount |
|---|---|
| Salary | $65,000 |
| + Benefits and employer taxes (43%) | $27,950 |
| + Business expenses | $3,000 |
| Revenue needed | $95,950 |
| Billable hours (48 weeks × 40 × 65%) | 1,248 |
| Equivalent freelance rate | $76.88/hr |
Income tax is left out on both sides, because you'd pay it on a salary too. Self-employment tax is covered by the employer-tax share included in the 43%.
Before you leave your job
- Price your health insurance on your own. It's often the largest new cost.
- Build a cushion of a few months of expenses. Freelance income is uneven, especially at first.
- Start on the side if you can, and wait until freelance income covers your salary plus benefits and taxes.
- Plan for taxes from day one. Nobody withholds them anymore. See the self-employment tax calculator.
Once you're quoting, see how to price a freelance project and, later, how to raise your rates.
FAQ
How do I convert my salary to a contractor rate?
Add the value of your benefits and the employer's payroll taxes to your salary, add business expenses, then divide by the hours you can bill. With average benefits, the result is often 2 to 2.5 times your salary divided by 2,080.
Why do contractors charge more per hour than employees earn?
Contractors pay for their own benefits, both halves of Social Security and Medicare, their tools, and their unpaid time off, and they bill fewer hours than they work.
What percentage of salary are benefits worth?
For U.S. private-industry workers, benefits averaged 30% of total compensation in June 2026, or about 43% on top of wages, according to the Bureau of Labor Statistics.
Sources: BLS: Employer Costs for Employee Compensation, June 2026. General information for planning, not tax, legal or financial advice.