How to convert hourly pay to an annual salary

The formula

Annual salary (gross) = hourly rate x hours per week x weeks worked per year.

Use 52 weeks if all of your time off is paid, or fewer weeks if some of your time off is unpaid. The weeks number is where most people trip up, so it is worth thinking about rather than defaulting to 52 out of habit.

The result is a gross figure: the amount before income tax, payroll taxes, retirement contributions, health insurance, and anything else that comes out of your paycheck.

A full-time example

Say you earn 22 dollars per hour and work a standard 40-hour week, paid for all 52 weeks including vacation and holidays:

22 x 40 x 52 = 45,760 dollars per year gross.

That 45,760 dollars is the annual salary equivalent of your hourly rate. It is the number to use when you are weighing a job that quotes an hourly rate against one that quotes a yearly salary, as long as you remember both figures are gross unless someone says otherwise.

A part-time example

The same formula covers part-time schedules. Suppose you earn 18 dollars per hour and work 25 hours per week across 52 weeks:

18 x 25 x 52 = 23,400 dollars per year gross.

Cutting the weekly hours pulls the annual number down fast, which is why two people with nearly the same hourly rate can land at very different yearly totals. If your part-time hours swing week to week, base the calculation on a typical week rather than your busiest one, or you will overestimate.

Gross salary versus take-home pay

Gross salary is the headline number the formula gives you. Take-home pay, also called net pay, is what actually lands in your bank account after everything is withheld.

The gap depends on where you live, how much you earn, your filing status, and what you choose to have deducted. Federal income tax, Social Security and Medicare, any state or local income tax, health insurance premiums, and retirement contributions all reduce what you keep.

So in the full-time example, 45,760 dollars is the gross salary, but your yearly take-home will be meaningfully lower. No single percentage applies to everyone, so any gross-to-net figure here is an estimate only, not financial or tax advice. Your real paycheck is the reliable source.

Why unpaid time off changes the total

The 52-week assumption only holds if you are paid for every week of the year, and many hourly workers are not. Take two weeks off without pay and you are earning for 50 weeks, not 52.

Rework the full-time example with 50 paid weeks:

22 x 40 x 50 = 44,000 dollars per year gross.

That is 1,760 dollars less than the 52-week figure, from the same hourly rate and the same weekly hours. Unpaid holidays, seasonal gaps, sick days without pay, and stretches between contracts all bite the same way. If your income is uneven, budgeting from the lower, more realistic weeks count keeps you from planning around money you will not receive.

Common mistakes

A handful of errors show up over and over when people convert hourly to annual:

• Assuming 52 paid weeks. If any of your time off is unpaid, use the weeks you are actually paid for, such as 50, or your total will run high.
• Ignoring overtime. Extra hours are often paid at a higher rate, so multiplying every hour by your base rate undercounts a job with regular overtime. Figure those hours and their rate separately.
• Confusing gross with net. The formula gives gross pay. Comparing your gross annual number against someone else's take-home, or against your monthly bank deposits, compares two different things.
• Using your best week instead of a typical one. For variable hours, average a normal week rather than picking your busiest.
• Forgetting that hours can change. A number built on 40 hours a week falls apart if you are cut to 32. Re-run the math when your schedule shifts.

Working backward and other conversions

Run the formula in reverse to check whether a salaried offer matches your hourly expectations: divide the annual salary by your weeks worked, then by your weekly hours, for an approximate hourly rate. A standard 40-hour week across 52 weeks is 2,080 hours, so dividing a salary by 2,080 gives that rate directly. This helps when a posting lists only a yearly figure.

To find the rate itself, the Hourly Rate Calculator handles it, and the Budget Calculator can help you plan once you have a realistic take-home number in mind. Everything runs in your browser; the numbers you type are not sent anywhere or stored.

A reference ladder for common hourly rates

Sometimes you just want to know roughly what a rate means over a year. Here are common rates run at 40 hours a week for 52 paid weeks, which is 2,080 hours, with the monthly figure being the annual total divided by 12. All are gross, before any tax or deduction.

Use the ladder to spot where a rate sits, then run your own exact hours and weeks for a real answer. If your schedule differs from 40 hours and 52 weeks, scale accordingly instead of reading straight from the list.

• 15 dollars an hour: 31,200 a year, about 2,600 a month
• 20 dollars an hour: 41,600 a year, about 3,467 a month
• 25 dollars an hour: 52,000 a year, about 4,333 a month
• 30 dollars an hour: 62,400 a year, about 5,200 a month
• 40 dollars an hour: 83,200 a year, about 6,933 a month
• 50 dollars an hour: 104,000 a year, about 8,667 a month

A head-math shortcut and why 2,080 is not exact

A fast way to size a wage in your head is to double the hourly rate and add three zeros. A 22 dollar wage doubles to 44, so you think 44,000 dollars. The real figure is 45,760, which means the shortcut runs about 4 percent low, because it quietly uses 2,000 hours instead of 2,080. It is fine for a first impression and too rough for comparing close offers.

Even 2,080 is a convention, not a law of nature. A calendar year is 52 weeks plus one day, or two days in a leap year, so the number of weekdays lands between 260 and 262 depending on the year. That moves the straight-time total anywhere from 2,080 to 2,096 hours. Employers who compute salaries from hourly equivalents generally standardize on 2,080 so the number stays the same year to year, which is why this guide uses it. When a payroll department hands you an hourly equivalent, ask which hours figure sits behind it.

Overtime and the salaried-versus-exempt trap

The basic formula treats every hour alike. In the United States, federal law generally requires covered nonexempt employees to be paid at least one and a half times their regular rate for hours worked beyond 40 in a workweek, and some states layer on daily overtime rules or other thresholds, so check your own state. Suppose you earn 22 dollars an hour and work 45 hours every week. Forty hours pay 880 dollars. The five overtime hours pay 5 x 33 = 165 dollars. That is 1,045 dollars a week, or 54,340 dollars across 52 weeks. Straight-time pay on those same 45 hours would only be 51,480, so overtime adds about 2,860 dollars a year.

Overtime is not guaranteed income, so lenders and landlords may not count it fully, and budgeting around it is risky. A separate trap: being paid a salary does not automatically mean you are exempt from overtime rules. Whether a role is exempt depends on its duties and pay basis under the law, not simply on whether you see a yearly figure on your offer letter. If you are converting a salaried job back to an hourly rate to judge a workload, divide the salary by the hours you actually work, not by 2,080, and the hourly value of that job may be lower than it looks.

Paid time off and how to compare two offers fairly

Two offers that look similar can differ because one pays you for time off and the other does not. Offer A pays 24 dollars an hour with no paid leave. Offer B pays a 46,000 dollar salary and includes three weeks of paid leave. If you take those three weeks under Offer A without pay, you are paid for 49 weeks: 24 x 40 x 49 = 47,040 dollars. Offer B pays 46,000 dollars whether or not you take leave.

To compare on equal footing, divide by hours actually worked. Under Offer B you work 49 weeks, or 1,960 hours, so 46,000 divided by 1,960 is about 23.47 dollars per hour of real work, close to but still below the 24 dollars of Offer A. Offer A wins by roughly 1,040 dollars of gross pay in this case, but only if the schedule and paid-leave assumptions hold. Add anything else that differs, such as health premiums, an employer retirement contribution, or a guaranteed schedule, before declaring a winner, because those items can be worth more than the gap between two hourly rates.

From annual to paycheck: weekly, biweekly, semi-monthly, monthly

Your annual number only becomes useful once you break it into the schedule your employer pays. Using the 45,760 dollar example, weekly pay is 880 dollars and monthly is about 3,813 dollars. Biweekly pay divides the year by 26, giving 1,760 dollars per check. Semi-monthly pay, twice a month, divides by 24 and gives about 1,907 dollars per check.

The difference between biweekly and semi-monthly catches people in budgeting. Biweekly pay comes every two weeks, so 26 checks a year means two months of the year bring three checks. Those extra checks are a handy place to put annual bills or savings instead of absorbing them into regular spending. Semi-monthly checks arrive on set calendar dates, so each is larger and the count never changes.

Be careful when matching a monthly bill to a biweekly check. A month is not exactly two pay periods: the true monthly equivalent of a biweekly pay stream is 26 checks divided by 12, about 2.17 checks. In the example, 1,760 x 26 / 12 comes to roughly 3,813 dollars a month, which is more than simply doubling a single check would suggest.

Seasonal work, shifting hours, and payroll taxes

When your schedule changes through the year, build the annual total from segments instead of one average. Suppose someone earns 19 dollars an hour, works 40 hours a week for 30 weeks in a busy season, and 20 hours a week for 22 weeks during the slow stretch. The busy stretch brings in 19 x 40 x 30 = 22,800 dollars. The slow stretch adds 19 x 20 x 22 = 8,360 dollars. Total gross pay is 31,160 dollars, about 2,597 a month if smoothed across 12 months, though cash arrives unevenly. A budget that expects the slow-season income to match the busy-season income will fall short.

Taxes enter once you move from gross to take-home. Most employees pay payroll taxes of 6.2 percent for Social Security plus 1.45 percent for Medicare, 7.65 percent in total on wages, and that comes before any income tax. On 45,760 dollars, that payroll share is about 3,501 dollars. Income tax depends on filing status, deductions, and state, so no single rate fits everyone. Check your most recent pay stub to see your real net, then divide your fixed monthly costs by that net, not by the gross figure this calculation produces.