Salary vs. Hourly vs. Freelance: Comparing Offers Apples-to-Apples

How to convert any pay structure into comparable numbers — including benefits, overtime, paid leave and self-employment tax.

Three structures, three hidden costs

Salaried roles bundle paid leave and benefits but may require unpaid extra hours. Hourly roles pay for every hour (and overtime if non-exempt) but may lack paid leave. Freelance work pays the most per billable hour but makes you the employer: you pay both halves of FICA, your own benefits and your own downtime.

Step 1: Put everything on an annual basis

Hourly × expected annual hours (not 2,080 if you'll get less). Salary + expected bonus. Freelance: realistic billable hours × rate − expenses.

Step 2: Add the benefits an employer pays

Employer health premiums commonly run several thousand dollars a year for single coverage, the employer 401(k) match is often 3–6% of pay, and employers pay 7.65% FICA on top of wages. A $55,300 salaried job with typical benefits can be worth well over $65,000 in total compensation.

Step 3: Subtract the costs you'd carry

Freelancers pay self-employment tax of 15.3% on 92.35% of net earnings (Social Security portion capped at $184,500 in 2026), plus insurance, equipment and unpaid admin time. That is why a contractor typically needs 1.5–2× an employee's hourly rate to come out even — see the freelance rate calculator.

Step 4: Compare per hour of life

Divide total value by real hours — including commute and the unpaid evenings a salaried role may expect. The offer comparison tool does this automatically.

Watch: related explainer

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Educational content only — not tax, legal or financial advice. Sources and assumptions: methodology.