Day rate example: what to charge for $120,000 a year
Want to take home $120,000? With 220 billable days, $8,000 in annual expenses, and a 25% tax buffer, you need to charge $776/day — about $97/hour on an 8-hour day.
The breakdown
- Take-home target: $120,000
- Plus expenses: $8,000 → $128,000
- Grossed up for 25% tax buffer: $128,000 ÷ 0.75 = $170,666.67
- Day rate: $170,666.67 ÷ 220 = $775.76
- Hourly equivalent: $775.76 ÷ 8 = $96.97
The tax buffer does the heavy lifting: you must bill $170,667 to keep $120,000. Cut billable days to 200 and the rate jumps to $853/day. Find your number in the day rate calculator.
Frequently asked questions
What day rate equals $120K a year?
About $776/day at 220 billable days with $8,000 expenses and a 25% tax buffer — roughly $97/hour.
How many billable days should I assume?
200–220 is realistic after holidays, time off, and non-billable admin. Fewer days means a higher required rate.
What should the tax buffer be?
25–30% is a common planning figure for freelancers covering income tax plus self-employment tax. It's planning math, not tax advice.
Should I quote day rate or hourly?
Day rates simplify project quotes and reward efficiency; hourly protects open-ended work. Quote whichever fits the engagement.