Why Use This Calculator?
Compare Job Offers Accurately
Convert salary offers to hourly rates to make fair comparisons. A $60,000 salary working 50 hours/week ($23.08/hour) is actually worth less than a $50,000 job at 40 hours/week ($24.04/hour) when you value your time.
Evaluate Freelance vs. Salary Worth
Calculate the true hourly value of your salaried position including benefits. A $70,000 salary equals $33.65/hour at 40 hours/week, helping you price freelance services competitively or decide if contract work at $50/hour is actually better.
Negotiate Pay More Effectively
Understanding your hourly value strengthens salary negotiations. When an employer offers $55,000, you'll know that's $26.44/hour - is that competitive for your field and experience? Data-driven discussions yield better outcomes.
Account for Unpaid Time Correctly
Subtract vacation days, holidays, and sick leave to calculate actual working hours. A $52,000 salary with 2 weeks vacation and 10 holidays means you work 2,000 hours (not 2,080), so your true rate is $26/hour, not $25/hour.
Plan Side Hustles Intelligently
Know if extra work is worth your time. If your main job pays $35/hour equivalent, taking a side gig at $20/hour might not make sense unless you need experience or enjoy the work. Value your time appropriately.
Understand Overtime Compensation
Calculate whether overtime pay is fair. At $60,000 salary ($28.85/hour), overtime should pay time-and-a-half ($43.27/hour). Many salaried employees don't realize they're exempt and work "free" overtime.
Step-by-Step Guide
Enter Your Annual Salary
Input your total yearly gross salary before taxes and deductions. Use the full amount from your offer letter or pay stub annual projection, not your take-home pay.
Example:
Example: $65,000 annual salary, or $5,416.67 monthly gross pay × 12 months = $65,000
Specify Your Work Hours Per Week
Enter typical hours worked per week. Standard full-time is 40 hours, but many professionals work 45-50+ hours on salary. Be realistic about actual hours worked, including evenings and weekends.
Example:
Example: 40 hours/week standard, 45 hours if you regularly stay late, 50 hours if you work weekends. Overtime-exempt employees should count all hours worked.
Account for Weeks Worked Per Year
Standard is 52 weeks minus vacation and holidays. Calculate: 52 weeks - vacation weeks - holiday weeks. Most full-time jobs: 50 weeks (2 weeks vacation + 10 days holidays ≈ 2 weeks).
Example:
Example: 3 weeks vacation (15 days) + 10 holidays = 25 days = 5 weeks off. 52 - 5 = 47 weeks worked per year
Include Only Paid Working Time
Don't count lunch breaks if unpaid. A typical day: 9am-5pm with 1-hour unpaid lunch = 7 hours worked per day, not 8. This affects your true hourly rate calculation significantly.
Example:
Example: 8am-5pm with 30-minute unpaid lunch = 8.5 hours worked daily. 5 days × 8.5 hours = 42.5 hours/week, not 40
Calculate Your Base Hourly Rate
Divide annual salary by (weeks worked × hours per week). This gives your gross hourly rate before considering benefits, taxes, or other compensation factors.
Example:
Example: $60,000 ÷ (50 weeks × 40 hours) = $60,000 ÷ 2,000 = $30/hour gross pay
Factor in Actual Work Patterns
If hours vary by season, calculate separately for busy and slow periods. For jobs with seasonal overtime or reduced summer hours, average the year or calculate multiple scenarios.
Example:
Example: Accountant: 60 hours/week Jan-Apr (16 weeks), 35 hours rest of year (36 weeks). Average: (960 + 1,260) ÷ 52 = 42.7 hours/week average
Compare to Industry Benchmarks
Research typical hourly rates for your role and location on sites like Glassdoor, PayScale, or Bureau of Labor Statistics. See if your calculated rate is competitive or below market.
Example:
Example: Software Developer in Austin: $35-55/hour typical. Your $52,000 salary at 45 hours/week = $22.22/hour suggests underpayment if experienced
Consider Benefits as Additional Value
Benefits typically add 20-40% to base salary value. Health insurance ($7,000-15,000/year), 401k match (3-6%), paid time off, and other perks increase your effective hourly rate significantly.
Example:
Example: $50,000 salary + $10,000 health insurance + $2,500 401k match = $62,500 total comp ÷ 2,000 hours = $31.25/hour effective rate, not $25/hour
Calculate Daily and Weekly Rates
Multiply hourly rate by hours per day for daily rate, by hours per week for weekly rate. Useful for comparing contract positions or freelance project pricing.
Example:
Example: $30/hour × 8 hours = $240/day. $30/hour × 40 hours = $1,200/week. $1,200 × 4.33 weeks = $5,196/month
Adjust for Unpaid Overtime Reality
If you're exempt and work 50 hours but paid for 40, your effective hourly rate is 20% lower than calculated. A $70,000 salary looks like $33.65/hour at 40 hours, but only $26.92 at 50 hours.
Example:
Example: $65,000 salary should be $31.25/hour at 40 hours/week. But working 50 hours means $25/hour actual compensation - a $6.25/hour pay cut per extra hour
Expert Tips & Strategies
Be Honest About Hours Actually Worked
Many salaried employees work 45-55 hours weekly. Calculate using real hours to see true compensation. If you consistently work 50 hours, you're earning 20% less per hour than you think. This information is crucial for negotiations and job decisions.
Track Your Hours for One Month
Keep a detailed log for 4 weeks to get accurate average. Include emails after hours, weekend work, and take-home projects. You might be surprised - many "40-hour" employees actually work 45-50 hours when everything is counted.
Calculate Multiple Scenarios When Comparing Jobs
Job A: $75,000 at 45 hours = $32.05/hour. Job B: $70,000 at 40 hours = $33.65/hour. Job B actually pays more per hour plus gives you 5 hours weekly for family, side hustles, or rest. Don't just compare salaries.
Remember Exempt vs. Non-Exempt Status
Exempt employees (salaried) don't get overtime pay regardless of hours worked. Non-exempt must be paid overtime at 1.5x for hours over 40. If you're working 50+ hours on exempt salary, your effective hourly rate plummets.
Use Hourly Rate to Price Freelance Services
Freelance rates should be 2-3x your employed hourly rate to cover benefits, taxes (7.65% additional self-employment tax), and lack of paid time off. A $30/hour employee job means $60-90/hour as contractor.
Account for Commute Time in Total Cost
1-hour daily commute = 5 hours/week unpaid time investment. Add this to work hours to see full time commitment. A $60,000 job with 10-hour weekly commute is really $26.09/hour (50 hours) not $30/hour (40 hours).
Recalculate After Every Raise or Hours Change
A 5% raise sounds great, but if your hours increased from 40 to 45, your hourly rate might have decreased. Always recalculate when salary or work expectations change to ensure you're actually coming out ahead.
Factor in Unpaid Leave Policies
Some jobs offer minimal PTO. Working 51-52 weeks (vs. 50 weeks standard) means 2-4% lower effective hourly rate. A $60,000 salary working 52 weeks (2,080 hours) = $28.85/hour vs. 50 weeks (2,000 hours) = $30/hour.
Common Mistakes to Avoid
Using 2,080 Hours Without Adjusting for Time Off
The standard 2,080 hours calculation (52 weeks × 40 hours) assumes working every single hour of every week all year with no vacation, holidays, or sick time. This creates an inflated hourly rate that doesn't reflect reality.
✓ Better approach: Subtract vacation and holidays from your calculation. If you get 2 weeks vacation + 2 weeks holidays = 4 weeks off = 2,000 hours is more realistic. This 4% difference matters when comparing job offers or negotiating raises.
Not Counting Actual Hours Worked
Many salaried employees assume they work 40 hours per week when they actually work 45-50 or more. Using the assumed hours rather than actual hours dramatically misrepresents your true hourly value.
✓ Better approach: Calculate with realistic hours you actually work, not contracted hours. Working 50 hours per week makes your $50,000 salary worth $19.23/hour, not $24.04/hour. Track your time for 2-3 weeks to know your true hourly value.
Forgetting About Unpaid Lunch Breaks
A typical 9-to-5 job with 1-hour unpaid lunch break means you're working 7 hours per day, not 8. Many people incorrectly use 40 hours per week when they actually work 35 paid hours.
✓ Better approach: If at office 9-5 with 1-hour lunch, use 35 hours/week for pay calculations (7 hours × 5 days). This inflates your hourly rate by 14% if miscalculated. For time investment decisions, count time at office (45 hours) but for pay calculations, count paid hours only (40 hours).
Comparing Salaries Without Considering Hours
A job offer of $80,000 seems obviously better than $70,000, but without considering required hours, you can't compare true value. The higher salary could actually pay less per hour.
✓ Better approach: Always convert to hourly rates when comparing offers. $80,000 requiring 55 hours per week = $28.57/hour. $70,000 at 40 hours = $33.65/hour. The 'lower' salary actually pays 18% more per hour worked.
Ignoring Benefits When Evaluating Total Compensation
Health insurance, 401k matching, paid time off, and other benefits add 20-40% to your effective compensation. Comparing salaries without benefits is comparing apples to oranges.
✓ Better approach: Calculate benefits value: health insurance ($5,000-15,000/year), 401k match ($2,000-5,000), PTO value (salary ÷ 52 × weeks PTO). A $50,000 salary with $12,000 benefits = $31/hour effective rate. $60,000 with minimal benefits = $30/hour - first job better deal.
Using Gross Salary for Freelance Rate Comparison
Employees don't pay 7.65% self-employment tax, don't buy their own health insurance, and don't cover business expenses. Many freelancers underprice by comparing to employee gross salary.
✓ Better approach: A $30/hour employee job needs $45-60/hour freelance rate to equal same take-home after self-employment tax, health insurance ($500-1,500/month), no paid time off, and business expenses. Freelance rates should be 1.5-2× W-2 hourly equivalent.
Not Recalculating When Responsibilities Grow
Getting promoted with a 10% raise sounds great until you realize your hours increased from 40 to 50 per week. Your hourly rate actually decreased by 10% despite the raise.
✓ Better approach: Always recalculate hourly rate when both salary AND expected hours change. If responsibilities grow significantly, negotiate higher raise to compensate for extra time. Track whether promotions actually improve hourly earnings or just increase hours for same effective pay.
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Frequently Asked Questions
How do you convert annual salary to hourly rate?
To convert annual salary to hourly rate, divide the annual salary by the total number of work hours in a year. A standard calculation assumes 40 hours per week and 52 weeks per year (2,080 hours annually). However, when accounting for paid time off, the actual work hours are fewer.
Should I include vacation days in the calculation?
It depends on your goal. If you want to know your true hourly earnings rate (including paid time off), don't subtract vacation days. If you want to know your hourly rate for actual hours worked, subtract vacation and holidays. We show both calculations.
What is considered full-time employment?
Full-time employment is typically 40 hours per week in the United States, though it can range from 35-40 hours depending on the employer and industry. Some employers consider 30+ hours as full-time, especially for benefits purposes.
How many hours is 2080 hours per year?
2,080 hours is the standard calculation for annual work hours (40 hours/week × 52 weeks). This is commonly used for salary-to-hourly conversions but doesn't account for vacation days, holidays, or sick leave.
Does hourly rate include benefits?
No, your hourly rate only includes your base salary or wages. Benefits like health insurance, 401(k) matching, bonuses, and other perks are separate from your hourly rate but are part of your total compensation package.
Financial Disclaimer
This calculator is provided for educational and informational purposes only. The results are estimates based on the information you provide and should not be considered as financial, legal, or tax advice.
Actual results may vary based on your specific circumstances, market conditions, and other factors. Always consult with qualified financial, legal, and tax professionals before making any financial decisions.
We make no guarantees about the accuracy, completeness, or reliability of the calculations. Use this tool at your own risk.