How Hourly Wage ↔ Salary Converter Works
Our free hourly-to-salary converter does more than simple multiplication. While the basic formula (hourly rate × 2,080 hours) gives you a rough number, real-world compensation involves overtime, PTO, taxes, and benefits that dramatically change the picture.
Enter your hourly wage or annual salary and toggle between conversion directions. The tool instantly shows your equivalent pay at every frequency: hourly, daily, weekly, biweekly, monthly, and annually. But the real value is in the tax breakdown — it calculates federal income tax using current brackets, state income tax for your state, Social Security (6.2% up to $168,600), Medicare (1.45% plus 0.9% Additional Medicare over $200K), and shows your actual take-home pay.
The overtime section models time-and-a-half pay for hours worked beyond 40 per week, which can significantly boost an hourly worker's effective annual salary. PTO adjustments reduce the effective hourly rate for salaried workers — that $60,000 salary with 3 weeks PTO works out to a higher effective hourly rate than you might think, since you are being paid for weeks you do not work.
This tool is essential for anyone comparing job offers between hourly and salaried positions, negotiating a raise, or simply understanding how much they actually earn after taxes. Pair it with the Job Offer Comparison Calculator tool for a complete analysis of competing offers, or use the Freelance Rate Calculator if you are setting rates for self-employment.
Key Terms Explained
- Gross Pay
- Your total compensation before any taxes or deductions are taken out — the headline number on your offer letter.
- Net Pay (Take-Home)
- The amount deposited in your bank account after federal tax, state tax, Social Security, Medicare, and other deductions.
- FICA Taxes
- Federal Insurance Contributions Act taxes — Social Security (6.2%) and Medicare (1.45%) combined at 7.65% for employees, matched by employers.
- Effective Tax Rate
- Your total taxes paid divided by gross income — the actual percentage of your earnings that goes to taxes, lower than your marginal bracket.
- Overtime (Time-and-a-Half)
- Under FLSA, non-exempt employees must receive 1.5× their regular rate for hours worked beyond 40 per week.
- PTO (Paid Time Off)
- Days you are paid but do not work — vacation, sick days, and personal days that increase your effective hourly rate.
Who Needs This Tool
A retail manager earning $22/hour with regular overtime wants to know if a $48,000 salary offer is actually a raise or a pay cut once overtime disappears.
Someone preparing for a performance review who needs to convert their $75,000 salary to an hourly rate to compare against industry benchmarks posted in hourly terms.
A contractor who previously earned $85,000/year needs to calculate what hourly rate to charge that equals their old salary after accounting for self-employment taxes and no benefits.
A part-time employee working 25 hours/week at $18/hour who wants to see their annual take-home pay after taxes to plan a realistic budget.
Methodology & Formulas
Annual Salary = Hourly Rate × Hours/Week × (52 − Unpaid Weeks). Overtime: hours over 40/week × rate × 1.5 × 52. Federal tax uses progressive bracket rates. FICA: 6.2% SS (capped at $168,600) + 1.45% Medicare + 0.9% Additional Medicare on earnings over $200K. Effective hourly rate for salaried workers: Annual Salary / (Working Hours/Week × Paid Weeks). Take-home = Gross − Federal Tax − State Tax − FICA.
Pro Tips
- When comparing hourly to salary, factor in overtime — an hourly worker doing 5 hours of OT per week earns 13% more than the base rate suggests.
- Remember that salaried positions often include benefits worth 20-40% of salary (health insurance, 401k match, PTO) that hourly roles may lack.
- Your effective hourly rate as a salaried employee is higher than you think because PTO means you earn the same annual pay in fewer working hours.
- Use the state tax calculator to compare the same salary across different states — moving from California to Texas can boost take-home pay by 10%+.
- If you work in a city with local income tax (NYC, Philadelphia, etc.), add 2-4% to your total tax burden beyond what this calculator shows.