Hourly to Annual Salary: How to Calculate Your True Pay Rate

When comparing job offers or planning your budget, it's crucial to be able to convert your pay between different time periods. A job might offer $25 an hour, while another offers $50,000 a year. Which pays more? And how does that translate into the actual paycheck you'll receive every two weeks?

The Basic Calculation: Hourly to Annual

To convert an hourly wage to an annual salary, the standard formula assumes a full-time schedule of 40 hours per week for 52 weeks a year. That's 2,080 working hours per year.

Formula: Hourly Rate × 2,080 = Annual Salary

For example, if you make $25 per hour: $25 × 2,080 = $52,000 per year.

The Reverse: Annual to Hourly

To find your hourly rate from an annual salary, simply divide by 2,080.

Formula: Annual Salary ÷ 2,080 = Hourly Rate

For example, a $60,000 salary works out to approximately $28.85 per hour ($60,000 ÷ 2,080).

Bi-Weekly vs. Semi-Monthly Pay: What's the Difference?

Many people confuse these two pay schedules, but they result in different paycheck amounts.

• •**Bi-Weekly**: You get paid every two weeks (e.g., every other Friday). This equals 26 paychecks per year. Because months don't have exactly 4 weeks, you'll have two months each year with 3 paychecks.
• •**Semi-Monthly**: You get paid twice a month (e.g., on the 15th and 30th). This equals 24 paychecks per year. Your paychecks are slightly larger than bi-weekly checks, but you never get a '3-paycheck month'.

Example for $52,000 salary:

How Unpaid Time Off Affects Your Salary

The standard 2,080-hour calculation assumes you are paid for 52 weeks, including holidays and vacation. If you are an hourly worker who doesn't get paid for holidays or vacation, your actual annual income will be lower.

For example, if you take 2 weeks of unpaid vacation and there are 10 unpaid holidays (2 weeks), you're only working 48 weeks (1,920 hours). At $25/hour, your actual annual income would be $48,000, not $52,000.

Quick Reference: Common Hourly to Annual Conversions

• •$15/hour = $31,200/year
• •$20/hour = $41,600/year
• •$25/hour = $52,000/year
• •$30/hour = $62,400/year
• •$40/hour = $83,200/year
• •$50/hour = $104,000/year

Gross Pay vs. Net Pay

Remember, our calculator shows **Gross Pay** — the amount before taxes and deductions. Your **Net Pay** (take-home pay) will be significantly lower after federal and state taxes, Social Security (6.2%), Medicare (1.45%), health insurance premiums, and 401(k) contributions are deducted. A good rule of thumb is to estimate your take-home pay as 70-75% of your gross pay.

Key Takeaways

• •Multiply hourly rate by 2,080 to get standard annual salary
• •Divide annual salary by 2,080 to get standard hourly rate
• •Bi-weekly means 26 paychecks/year; Semi-monthly means 24 paychecks/year
• •Account for unpaid time off if you don't receive paid vacation/holidays
• •Always budget based on Net Pay (after taxes), not Gross Pay