How HourFloor calculates your rate and taxes
The formulas, the 2026 figures and where each one comes from. This page is generated from the same data files the calculators use.
Updated · Tax year 2026 · By Volkan Eren · Sources & method
Why the calculator works backwards
Taxes depend on income, and the income you need depends on taxes. Instead of guessing a tax percentage, the rate calculator solves for the yearly billings that leave exactly your target take-home pay after every tax and cost (a numerical bisection accurate to a cent), then divides by your billable hours.
When a spouse has W-2 wages, the calculator charges your freelance income only with the extra tax it causes: household tax with your freelance income minus household tax without it.
Federal calculation, tax year 2026
- Net profit = billings − business expenses.
- Self-employment tax (Schedule SE): net earnings = 92.35% × net profit (none if under $400); 12.4% of net earnings up to $184,500 plus 2.9% of all net earnings.
- Additional Medicare Tax (Form 8959): 0.9% of wages plus net earnings above $200,000 single / $250,000 married filing jointly; wages use the threshold first.
- Retirement contributions are capped at the solo 401(k) maximum: elective deferral up to $24,500 plus 20% of net profit after half of self-employment tax, within the $72,000 annual additions limit.
- Self-employed health insurance is deductible up to net profit minus half of self-employment tax and retirement contributions.
- Adjusted gross income = net profit + spouse wages − half of self-employment tax − health insurance − retirement contributions.
- Qualified business income (QBI) deduction (Section 199A): 20% of qualified business income (profit after the three deductions above), limited to 20% of taxable income before QBI. Above $201,750 ($403,500 married) it phases down to zero by $276,750 ($553,500), assuming no W-2 employees or business property; for specified service businesses the qualified income also phases out. Minimum deduction $400 with at least $1,000 of QBI.
- Federal income tax on AGI minus the standard deduction and QBI deduction, using these brackets:
| Rate | Single | Married jointly | Head of household |
|---|---|---|---|
| 10% | Over $0 | Over $0 | Over $0 |
| 12% | Over $12,400 | Over $24,800 | Over $17,700 |
| 22% | Over $50,400 | Over $100,800 | Over $67,450 |
| 24% | Over $105,700 | Over $211,400 | Over $105,700 |
| 32% | Over $201,775 | Over $403,550 | Over $201,750 |
| 35% | Over $256,225 | Over $512,450 | Over $256,200 |
| 37% | Over $640,600 | Over $768,700 | Over $640,600 |
| Standard deduction | $16,100 | $32,200 | $24,150 |
State income tax calculation
Each state starts from federal AGI, federal taxable income or its own income definition, then applies only the self-employment deductions that state allows, its standard deduction or exemptions, its 2026 brackets and any exemption credit. Local income tax is included only where nearly every resident pays one; otherwise it is described on the state page. Each state page lists the rules the calculator simplifies.
What the estimates leave out
- Itemized deductions, tax credits (child tax credit, education credits, premium tax credit) and dependents.
- Capital gains, investment income, alternative minimum tax and the net investment income tax.
- Phase-outs of state exemptions and credits unless a state page says otherwise.
- S corporation elections, payroll for employees and multi-state income allocation.
These estimates are for planning. They are not a tax return and not tax advice.
Federal sources
- IRS Rev. Proc. 2025-32 (2026 inflation adjustments) (retrieved October 22, 2026)
- SSA: 2026 Social Security changes (contribution and benefit base $184,500) (retrieved October 22, 2026)
- IRS: Questions and answers for the Additional Medicare Tax (retrieved October 22, 2026)
- IRS Notice 2025-67 (2026 retirement plan limits) (retrieved October 22, 2026)
- IRS Publication 334, Tax Guide for Small Business (retrieved October 22, 2026)
State sources
Every state record is checked against its revenue department and secretary of state. Last verification dates:
How the tax engine is tested
Automated tests check the tax engine against an independent re-implementation and against the base amounts printed in IRS Rev. Proc. 2025-32. A change that breaks a test cannot be published. Found an error? Tell us on the corrections page.