💼 Hourly to Salary Calculator

Key concepts

Hourly to salary conversion is one equation with three honest variables: hours per week, weeks per year, and overtime. The shortcut everyone uses — hourly × 40 × 52 = annual — assumes 40-hour weeks and a full 52-week paid year. That’s correct for most salaried-exempt workers (they get paid the full 52 weeks regardless of vacation), but it’s an over-estimate for hourly W-2 workers who take unpaid time off and for 1099 contractors who control their own schedule. The mental shortcut that survives reality is to use 50 weeks unless your employer pays vacation, which knocks ~4% off the headline number. Overtime under the federal FLSA pays at 1.5× for hours above 40 per week (non-exempt employees only), and salaried-exempt employees don’t get overtime no matter how many hours they work. A $25/hr base with 5 hours of overtime per week adds $9,750 a year — meaningful enough that high-overtime industries (trades, healthcare, manufacturing) often produce hourly W-2 incomes that out-earn salaried-exempt office workers with the same base rate.

The effective hourly rate, factoring in PTO, is the single most useful number for comparing offers across employers. Paid time off doesn’t reduce your annual salary — you still get paid the same $52,000 whether you take vacation or not. But it does reduce the hours you actually work, which raises the effective rate. A $52k salary with 10 holiday + 10 vacation days means you worked 1,920 hours, not 2,080 — effective rate is $27.08/hr, not $25.00/hr. Two offers can look identical at the headline ($60k, 40hr/wk) but differ by $3+/hour effectively because one has 15 PTO days and the other 30. When you’re benchmarking offers, ask about both the salary and the PTO+holidays in the same conversation. The lurking trap in salaried-exempt offers: if the team routinely works 50-55 hour weeks “just because that’s the culture,” the effective rate drops fast — $80k at 55 hours/week over 50 worked weeks is just $29.09/hr, often less than the hourly W-2 alternative people dismissed.

The FLSA white-collar exemption defines who gets overtime and who doesn’t. Salaried-exempt employees (executive, administrative, professional, computer, outside sales) don’t get overtime regardless of hours worked. The federal salary threshold for exempt status was $43,888/year as of 2024, scheduled to rise to $58,656 in 2025 (this rule is in litigation and may change). Below the threshold you must be classified non-exempt, get paid hourly, and get 1.5× for hours above 40. Above the threshold, employers can classify you as exempt if your job duties qualify (the “duties test”) — primarily managerial discretion, independent judgment, or specialised knowledge requiring advanced degrees. Misclassification is one of the most-litigated wage-and-hour issues in the US: companies that classify low-level employees as exempt to dodge overtime obligations frequently lose Department of Labor enforcement actions and class-action suits. If you’re salaried-exempt under $58k or in a role that doesn’t obviously meet the duties test, you may have a legitimate overtime claim.

Bonuses, commissions, and equity sit on top of the base salary; they’re what wage-rate conversion can’t capture. Sales-heavy roles often have base + commission structures where the commission portion is 50%+ of total comp — the base is the floor, the commission is the variable upside. Tech roles often have base + RSU (restricted stock units) that vest over 4 years, with year-1 sign-on bonuses to smooth the vest cliff. The wage-conversion math gives you the salary line item, but you need to layer on bonus, commission, equity, and benefits to get total compensation (TC). Two practical traps: (1) bonuses are taxed as supplemental wages at a flat 22% federal withholding rate (37% above $1M/year), so the cash-in-hand from a bonus is smaller than you’d expect — you get the difference back at tax time. (2) For lender qualification (mortgages, auto loans), most lenders only count base salary + a 2-year trailing average of bonuses; one strong year doesn’t fully qualify you. RSU vests are also often discounted by lenders or treated as unreliable income.

W-2 vs 1099 wage benchmarking requires a 40-50% premium on the hourly rate. The wage-conversion math is identical between W-2 and 1099 (hourly × hours × weeks = annual), but the tax and benefit math is dramatically different. W-2 employees: employer pays half of FICA (7.65%), provides health insurance, life insurance, short-term disability, 401(k) match, paid time off, unemployment insurance backstop, and workers’ comp. 1099 contractors: pay the full 15.3% self-employment tax yourself, buy your own health insurance, have no employer 401(k) match (though you can max a Solo 401(k) or SEP-IRA), no PTO (every day off is unpaid), no UI safety net. The break-even rule that survives in practice: 1099 hourly rate should be 1.4×-1.5× the W-2 hourly rate to roughly match net take-home, before even adjusting for the volatility / customer-acquisition / accounting overhead that 1099 work brings. So a $30/hr W-2 role is roughly equivalent to $42-$45/hr as a 1099 contractor.

The smallest honest reality check on hourly-to-salary conversion: use the right weeks number. 52 weeks is the headline standard and is correct for most salaried-exempt workers. 50 weeks is correct for hourly W-2 workers with 2 weeks of unpaid leave (the common case). 48 weeks is realistic for hourly contractors or freelancers who take ~4 weeks unpaid per year. The difference between using 52 and 50 weeks is ~4% — $2,000 a year on a $52k salary, $4,000 a year on a $100k salary. Multiply by 30 working years and the rounding error becomes $60k-$120k of phantom lifetime income that doesn’t exist. The single most important habit for hourly contractors and hourly W-2 workers benchmarking against salaried offers is to use 50 (not 52) and to factor in unpaid sick days realistically. The calculator above lets you tune all three inputs so the output reflects your actual paid weeks — not the recruiter’s headline math.