If you want to replace a salary by freelancing, you can't just divide that salary by 2,080 and bill it. A job paid for far more than the number on your offer letter — health insurance, a retirement match, both halves of payroll tax, paid time off, equipment, and plenty of hours you weren't directly billing. To take home the same money, your freelance rate has to be meaningfully higher than the salary suggests.
Your salary was only the visible part of your compensation. Around it, an employer typically covered:
Their half of payroll taxes. As an employee, you paid roughly 7.65% toward Social Security and Medicare and your employer matched it. Self-employed, you pay both halves — about 15.3% — though you can deduct part of it.
Health insurance. Often the employer covered most of the premium. On your own, that's a real monthly cost.
A retirement match. Free money that now has to come out of your own revenue if you want to keep saving at the same level.
Paid time off. Vacation, holidays, and sick days were paid. As a freelancer, time off is time not earning.
Overhead. Laptop, software, phone, desk — all previously expensed by someone else.
The right way to think about it is to replace your total cost to an employer, then add the taxes and overhead you now carry, then divide by your real billable hours. When you add it all up, a $97,000 salary doesn't become a $97,000 freelance income at the same rate — it becomes a higher revenue target spread over fewer billable hours, which pushes the hourly rate up substantially.
| Take-home you want to match | $70,000 |
| Grossed up for tax (28% set-aside) | $97,222 |
| + Health insurance you now buy | $6,000 |
| + Retirement you now fund | $6,000 |
| + Business expenses | $4,000 |
| + 10% cushion | $11,322 |
| = Revenue needed | $124,544 |
| ÷ 1,200 billable hours/year | ~$104 / hour |
So a comfortable salaried life around $70k take-home translates to roughly a $104/hour freelance rate — more than double the ~$47 a naive "salary ÷ 2080" would suggest. That's not greed; it's the true cost of everything the job used to absorb on your behalf.
Two practical checks worth doing in advance. First, confirm you can realistically bill enough hours at that rate to hit the revenue target — winning the work is the hard part, not setting the number. Second, build a cash buffer: freelance income is lumpy, and the first months are usually the leanest. Knowing your number is step one; knowing how long your savings last is step two.
To plan the whole transition — rate, project pricing, and modeling rate increases as you build a client base — the Freelance Pricing Toolkit ($29) keeps all of it in one spreadsheet you can revisit as your situation changes.
Note: tax figures here are general estimates, not tax advice. The 7.65% / 15.3% figures describe the standard US payroll-tax structure; confirm your own situation with a qualified professional.