Hourly to salary conversion explained in plain English

Converting between hourly wages and annual salary is one of the most common calculations workers and employers face — whether evaluating a job offer, comparing compensation, or understanding what a pay rate change means annually.

The basic conversion

Standard assumption: 40 hours/week x 52 weeks = 2,080 hours per year. Annual salary = hourly rate x 2,080. A $20/hour rate equals $41,600/year. A $25/hour rate equals $52,000/year. Going the other direction: hourly rate = annual salary / 2,080. A $75,000 salary equals about $36.06/hour. A $50,000 salary equals about $24.04/hour. The 2,080-hour baseline assumes no unpaid time off and full-time hours every week.

Gross vs. net pay

The converted annual figure is gross pay — before taxes and deductions. Your actual take-home pay depends on federal and state income tax withholding, Social Security (6.2% of wages up to the annual cap), Medicare (1.45%), retirement contributions, health insurance premiums, and other deductions. At $20/hour ($41,600/year), a single filer might take home approximately $33,000-$35,000 after taxes depending on state. A $75,000 salary in Texas (no state income tax) nets more than the same salary in California (up to 9.3% state income tax for this income level).

Part-time and variable hours

For part-time work, replace the 2,080-hour standard with your actual scheduled hours. A $22/hour part-time job at 25 hours/week = 1,300 hours/year = $28,600 gross. For variable hours, use your average weekly hours over the past 3-6 months as the input for a realistic annual projection. Overestimating annual income from hourly work is a common budgeting error — use an average from a period that includes slow periods, not just peak weeks.

Salaried vs. hourly: beyond the number

The same gross compensation looks different as salary vs. hourly because of overtime rules. Hourly non-exempt employees earn 1.5x their regular rate for hours over 40/week. Salaried exempt employees do not. A $60,000 salary might mean 40 hours/week, or it might mean 50+ hours in a demanding role. When evaluating a job offer, calculate the effective hourly rate by estimating realistic weekly hours. A $60,000 salary at 45 hours/week is an effective $25.64/hour. A $52,000 hourly equivalent at 40 hours is $25.00 plus overtime eligibility.

Frequently asked questions

Does a salary include overtime pay?
For exempt salaried employees, no — salary is total compensation regardless of hours. For salaried non-exempt employees, overtime is still owed for hours over 40/week. The distinction depends on your classification under the FLSA, not just whether you receive a salary.

How do benefits factor into the comparison?
Employer-provided health insurance, retirement matching, and paid time off have real dollar value not visible in the wage figure. A $20/hour job with full employer health coverage has substantially higher total compensation than a $23/hour contract with no benefits. For a complete comparison, value the benefits and add them to the base compensation before comparing offers.