Hourly to Net Pay Calculator
Estimate your real take-home hourly rate after taxes. Useful for comparing freelance rates against W-2 salary positions.
What this calculates
An $80/hour contract isn't worth $80 in your pocket. After self-employment tax, federal income tax, state tax, and benefits you have to pay yourself, true take-home is much lower. This calculator gives a quick estimate to compare freelance hourly rates against W-2 salary offers.
Formula & how it works
W-2 net = gross × (1 − effective_tax). Effective tax typically 20-30 % federal + state + FICA for $60-150K earners. Self-employed (1099) net = gross × (1 − effective_tax − 0.0765 SE_tax). Plus subtract healthcare ($500-1500/month family), retirement match equivalent (5-7 %), PTO equivalent (4 %). Real freelance net often 60-65 % of gross.
Worked example
$80/hour contract, 40 hours, 50 weeks. Gross = $160,000. SE tax 15.3 % (you pay both halves) → save 1.45 % vs employer; effective tax ~32 % federal + 6 % state. Healthcare $1,200/mo family = $14,400. PTO 3 weeks lost income = $9,600. Net effective: ~$95K = $59/hour real take-home. A $90K W-2 salary at $43/hour pays similarly net.
Frequently asked questions
Why is self-employment so much worse on taxes?
You pay both halves of FICA (15.3 % vs W-2's 7.65 %). You pay quarterly estimated tax. No employer retirement match. No employer-paid health insurance share. Self-employed health and retirement are deductible — partially offsetting.
What's the right freelance multiplier?
Rough rule: take a W-2 salary you'd accept, divide by 1000 (e.g., $80K → $80/hour). Better: figure your real costs and add 30-50 % on top.
Are PTO and healthcare really that big?
Yes. A typical US benefits package adds 25-30 % to effective compensation. Freelancers have to replace each piece (or accept doing without).
Should I just incorporate?
Worth exploring above $80K income. S-corp election can save FICA on portion of profit. Costs $1-3K/year in compliance. Talk to a CPA.
Disclaimer: Estimate only — actual tax depends on bracket, deductions, and state. Talk to a CPA.