Salary to Hourly Calculator

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How to Convert Salary to Hourly Pay

Generally speaking, there are two ways an employee can get paid: with an annual salary or an hourly wage.

While there might be other non-cash benefits that make up a worker’s total compensation as insurance, vacation days, company perks, and more—these are the two most common ways for people to get paid in cash as part of their annual income.

There are also plenty of payment structures that offer elements of both. Hybrid pay systems (part hourly and part salary), as well as commission-based payment systems, are just two of these examples.

If you are comparing different job offers or trying to negotiate with a potential employer, it would be helpful to know how to convert an annual salary into hourly pay. When all else is equal, it will be easier to identify which is the better compensation for the time you work and which payment structure will work best for you.

In this guide, we will discuss the most important things to know about converting a salary into an hourly wage.

Steps to Convert a Salary to an Hourly Wage

If you are currently a salaried employee or are considering becoming a salaried employee, you may want to know what that equates to per hour.

Business owners and contractors who want to determine if working independently is a financially justifiable decision would also want to know their hourly pay.

Fortunately, converting a salary into an hourly wage is fairly straightforward. You need to identify the following variables:

Your current salary
The average number of hours you work per week (including the weeks you don’t work at all, which will bring the average down a bit)
The number of weeks in the period you are measuring for (if you are measuring for a year, that number would be 52)

Salary to Hourly Wage Formula

You can use this formula to calculate your hourly wage:

hourly wage = salary / hours per week × 52

For example, let’s suppose that your annual salary is $60,000, and, on average, you work 36 hours per week.

While your typical work week is 40 hours long, you took a few weeks off for vacation and sick days that you were not paid for, so the average number of hours you actually worked is a little bit less than your typical work week.

Using the formula above, we can solve:

hourly wage = $60,000 / 36 × 52
hourly wage = $60,000 / 1,872
hourly wage = $32.05 per hour

So, in the example above, you would be making $32.05 per hour.

The 1,872 figure in the calculation above represents the total number of hours you worked in the given year.

If you already have that information, you can actually use an even simpler formula to make your final calculation.

hourly wage = total salary / total hours worked

For example, suppose your annual salary is $80,000, and you are already aware that the total number of hours you worked that year was 2,000 (a fairly typical figure).

In this case, you can use the simplified formula resulting in the following wage:

hourly wage = $80,000 / 2,000 hours
hourly wage = $40 per hour

In this example, the equivalent wage would be $40 per hour.

These formulas both work regardless of how many hours you worked in a given year or what your salary might be.

A typical full-time job, where an employee works 40 hours per week and is paid for their time off and holidays, consists of 2,080 hours per year.

Of course, there can sometimes be other factors that can complicate things.

For example, if your employer offers company-paid health insurance coverage that would otherwise cost $8,000 per year for you to get on your own, you might want to consider adding that figure into your final calculation. This will make it easier to compare total compensation packages as opposed to only comparing your salary or hourly wage.

These formulas do not account for variables, such as overtime pay and the effects of taxes and other possible withholdings, so you may need to also consider that for an overall picture of your compensation.

How to Account for Salary Taxes and Withholdings

The salary-to-hourly calculations assume your pre-tax salary income, and the result is your pre-tax hourly wage. This is also called gross pay.

To find take-home post-tax pay, or net pay, you’ll need to account for income tax, social security, medicare, state, and local taxes. You’ll also need to account for other withholdings like health insurance or retirement.

Your income should be taxed at the same rate for both salary and hourly wages. So, if you know your tax rate and withholdings for your salary, you can use the same rates and withholdings to find your post-tax hourly wage.

For instance, if your annual taxes and withholdings are $10,000, then you can divide the $10,000 by the total number of hours you work per year to find your tax rate per hour.

Then, subtract the taxes and withholdings per hour to find your post-tax hourly rate.

To figure out your taxes and withholdings, it’s best to consult with an accountant or use the IRS tool for calculating withholdings.^[1]

How to Decide Which Structure is Best

When comparing different jobs or different compensation packages, there are a lot of things you should consider.

Taking some time to assign values to non-cash components of your compensation — healthcare, retirement contributions, vacation days, reimbursements, schedule, etc. — will make it easier to compare options that have different structures.

There are also other factors to consider, such as salaried employees may have to work more than 40 hours in some weeks without proportionate compensation. Hourly wage employees, on the other hand, might not be able to access as many benefits as their salaried counterparts.

Both systems have their fair share of pros and cons, but in either case, learning how to convert a salary to an hourly wage (and vice versa) can be beneficial.

Frequently Asked Questions

What is a good hourly wage?

The average hourly wage as of January 2023 in the United States was $33.03, but this varies greatly by geographical location, industry, education level, and experience.^[2] The Federal minimum wage is $7.25 per hour, but most states’ minimum wage laws are much higher than the Federal rate.^[3]

How many hours is full-time?

Under the Fair Labor Standards Act (FLSA), there is no definition of full-time or part-time employment.^[4] This is determined by each employer, however, most employers consider an employee whose work hours are 30 hours per week or greater to be full-time.

Typically, full time employees receive additional benefits that part-time employees do not, so it’s important to clarify with a potential employer if a job is considered full-time or part-time.

Is hourly-pay better than commission-pay?

Whether hourly-pay or commission-based pay is more beneficial to an employee depends on their personal preference. Commission-only jobs sometimes offer fewer benefits than full-time hourly jobs. There is also no federal minimum wage set in place for commission-only jobs, which means an employee may work for hours that they are not compensated for if they are not making sales.

In many cases, employees that are paid on commission also do not receive annual pay raises, which can be an important consideration.

Overall, it’s important to understand your hourly wage, whether you are a salary employee or hourly employee. This will help you compare different jobs, negotiate with employers, and properly budget.

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