Contractor hourly rate calculator: the rate you need to charge

How the rate is built

Start with the income you want, as you would think of a salary. An employer would also pay at least 3.5% of it into KiwiSaver from 1 April 2026, so the calculator can add that, and then your business costs: an accountant, insurance, equipment, software, memberships, training and ACC's work levy. That total is what the year's invoices must bring in before GST. Divide it by the hours you can really bill and you have the hourly rate. A day rate is that rate times the hours in your day.

The billable hours are the part most people get wrong. Take the working days in 52 weeks, then take off the weeks you will not work, the public holidays and some sick days. An employee is paid for all of those: 4 weeks' annual holidays, 12 public holidays on a Monday to Friday week, counting your regional anniversary day, and 10 days' sick leave a year under the Holidays Act 2003. Then take off the share of each day spent quoting, invoicing and finding the next contract. In the example, 223 working days of 8 hours at 85% billable is 1,516.4 hours, and $109,500 over those hours is $72.21 an hour.

Tax, ACC and what to put aside

The income you want is taxed at the 2026/27 rates for individuals. As a self-employed person you also pay ACC's earners' levy: $1.52 per $100 of earnings plus GST, $1.75 with GST, on earnings up to $156,641. ACC invoices it after your tax return, and if you work more than 30 hours a week it is charged on at least $50,501. The calculator shows the income tax, the levy and any student loan as an amount per hour billed, so you know what to move aside from every payment. If a client deducts schedular tax, that is part of the same income tax, not extra. Our guide to contractor tax covers provisional tax and the IR330C.

GST on top of the rate

Once you are registered for GST, which you must be when your turnover reaches $60,000 in 12 months, you add 15% to every invoice and pass it to Inland Revenue. The rate before GST is yours; the GST never is. If you are not registered, you cannot charge GST at all. Our invoice from hours calculator turns this rate into an invoice.

Checking the rate against a salary

The last line compares your rate with the hourly pay of the same income as a salary over a full year. The gap is not profit: it pays for the leave, holidays, sick days and unbilled hours an employer would otherwise pay for, plus your costs. Our article on contract rates against a salary sets out the usual range, and the one on negotiating a contract rate covers how to put the figure to a client or agency.