Freelance vs Salary Calculator
Compare a salaried job offer with freelancing on a fair, like-for-like basis.
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Salaried job
Freelancing
Comparing like with like
A $70,000 salary and $70,000 of freelance revenue are not the same thing. An employee also receives benefits that cost the employer real money: health insurance, retirement contributions, paid holidays and sick days. A freelancer pays for their own tools and, in many countries, pays an extra slice of payroll tax that an employer would normally cover. And no freelancer bills 40 hours a week, 52 weeks a year.
This calculator puts both options on the same footing. It adds the value of benefits to the salary, and it takes expenses and extra tax away from freelance revenue. What is left is a fair comparison of what each path is really worth to you before income tax.
The formula
Salary package = salary × (1 + benefits %)
Freelance revenue = hourly rate × billable hours per week × (52 − weeks off)
Freelance value = (revenue − expenses) × (1 − extra tax %)
Break-even rate = (salary package ÷ (1 − extra tax %) + expenses) ÷ billable hours per year
Worked example
A $70,000 job with benefits worth 25% is a package worth $87,500. Freelancing at $65 an hour for 25 hours a week over 46 weeks brings in $74,750. After $6,000 of expenses and 7.65% extra tax, that is worth about $63,500 — roughly $24,000 less than the job. To match the job you would need about $87 per hour.
Things the numbers do not show
- Flexibility: choosing your hours, clients and location has real value to many people.
- Risk: freelance income can drop suddenly, so keep a larger emergency fund.
- Upside: freelancers can raise rates or add clients; salaries usually grow more slowly.
Frequently asked questions
How much are employee benefits usually worth?
It varies widely by employer and country. In the US, benefits are often estimated at 20% to 40% of salary. Use your own offer letter or benefits summary if you have it.
What is the "extra tax" for freelancers?
In the US, employees and employers each pay half of Social Security and Medicare taxes, about 7.65% each. Self-employed people pay both halves. Other countries have different rules, so enter the figure that applies to you, or 0 if none.
Why is income tax not included?
Both options are compared before income tax so the comparison stays simple and fair. Your actual tax will depend on deductions and where you live.