# Contractor Hourly Rate Calculator

> Enter the take-home pay you want, a tax estimate, your yearly overhead and a profit cushion, then your weeks, hours and the share of them that you can bill. The calculator gives the hourly rate you must charge. $60,000 take-home with $20,000 overhead and 60% billable time needs $96.45 an hour.

Canonical: https://receiptscanner.co/tools/contractor-hourly-rate-calculator
Updated: 2026-10-28 · Sources re-checked by: 2027-10-28

This is a free interactive calculator that runs in the browser. Nothing you type is stored or sent. Results are estimates.

## How it works

Pre-tax pay = take-home pay ÷ (1 − tax rate). Costs = pre-tax pay + yearly overhead (insurance, truck, tools, phone, software, licenses). Revenue needed = costs ÷ (1 − profit percent), a cushion for slow months and growth. Billable hours = weeks worked × hours per week × the share of time you can actually bill (driving, quotes, paperwork and shopping for materials are not billable). Hourly rate = revenue needed ÷ billable hours. The tax rate is your own estimate, so it is not tax advice.

**The same goals at different billable shares ($60,000 take-home, $20,000 overhead, 48 weeks of 40 hours)**

| Billable share | Billable hours | Hourly rate |
| --- | --- | --- |
| 40% | 768 | $144.68 |
| 50% | 960 | $115.74 |
| 60% | 1,152 | $96.45 |
| 70% | 1,344 | $82.67 |
| 80% | 1,536 | $72.34 |

**Costs people forget to put in overhead**

| Cost | Why it counts |
| --- | --- |
| Liability and vehicle insurance | You pay it whether or not the phone rings |
| Truck, fuel and repairs | Driving to jobs and the supply house is unpaid time |
| Tools and replacements | Hand tools break and wear out |
| Licenses, permits and software | Fixed yearly costs |
| Phone, advertising and a website | How the next job finds you |
| Unpaid weeks | Holidays, sickness and slow seasons |

## Worked example: $60,000 take-home, 25% tax estimate, $20,000 overhead

1. Pre-tax pay: 60,000 ÷ (1 − 0.25) = $80,000.00.
2. Costs: 80,000 + 20,000 overhead = $100,000.00.
3. Revenue needed with a 10% cushion: 100,000 ÷ 0.90 = $111,111.11.
4. Billable hours: 48 weeks × 40 hours × 60% = 1,152.
5. Hourly rate: 111,111 ÷ 1,152 = $96.45 an hour, about $2,314.81 of work to bill each week.

## FAQ

### How do I work out my hourly rate as a contractor?
Start from the pay you want after tax, add the tax and your overhead, add a profit cushion, and divide by the hours you can really bill. This page does those steps in order.

### Why can't I divide my pay by 2,080 hours?
Because you cannot bill every hour of a 40-hour week. Quotes, driving, supply runs and paperwork are unpaid, so billable time is often only half to two-thirds of the week.

### What billable percentage should I use?
Use your own history if you track time. Many solo tradespeople bill roughly half to two-thirds of their working hours. Try 50, 60 and 70 in the table and see how much the rate moves.

### What should I count as overhead?
Every cost of being in business that is not charged to a single job: insurance, vehicle, tools, licenses, phone, software and advertising. The list above has more.

### What tax rate should I enter?
Your own estimate of the share of your income that goes to income and self-employment tax. It depends on where you live and your situation, so ask an accountant if you are unsure.

### Is this rate the same as what employees earn per hour?
No. An employee's wage does not carry your overhead, tax or unpaid time. A contractor rate is usually well above a wage for the same trade, which is why this page is built backward from your own costs.

## Sources

- [U.S. Bureau of Labor Statistics, Occupational Outlook Handbook: pay for construction trades (to compare your rate with local wages)](https://www.bls.gov/ooh/construction-and-extraction/home.htm) (checked 2026-10-28)
- [Overhead (business): ongoing costs of running a business that are not charged to one job](https://en.wikipedia.org/wiki/Overhead_(business)) (checked 2026-10-28)

This calculator is an estimate for planning. It is not tax, accounting or legal advice. Compare the result with local market rates before you quote.