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Quick Reference: Hourly ↔ Annual
- Multiply hourly rate × 2,080 for standard annual salary
- Divide annual salary ÷ 2,080 for standard hourly rate
- Subtract PTO days from 260 working days to get actual working days
- Overtime at 1.5× for hours over 40/week (US law)
- Add benefits value (typically $8,000–$20,000/year) for true compensation
- Freelancers need ~1.5–2× employee rate to achieve equivalent take-home
Examples
Example 1: Standard Conversion (40 hrs/week)
Standard work year: 40 hours/week × 52 weeks = 2,080 hours
Hourly Rate → Annual Salary:
$15/hr → $31,200/year
$20/hr → $41,600/year
$25/hr → $52,000/year
$30/hr → $62,400/year
$40/hr → $83,200/year
$50/hr → $104,000/year
$75/hr → $156,000/year
$100/hr → $208,000/year
Annual Salary → Hourly Rate:
$40,000/year → $19.23/hr
$50,000/year → $24.04/hr
$60,000/year → $28.85/hr
$75,000/year → $36.06/hr
$100,000/year → $48.08/hr
$120,000/year → $57.69/hr
$150,000/year → $72.12/hr
Example 2: Accounting for Paid Time Off
PTO reduces actual working hours, increasing effective hourly rate:
Salary: $60,000/year
PTO Days | Working Days | Working Hours | Effective Hourly Rate
---------|--------------|---------------|----------------------
0 days | 260 days | 2,080 hours | $28.85/hr
5 days | 255 days | 2,040 hours | $29.41/hr
10 days | 250 days | 2,000 hours | $30.00/hr
15 days | 245 days | 1,960 hours | $30.61/hr
20 days | 240 days | 1,920 hours | $31.25/hr
25 days | 235 days | 1,880 hours | $31.91/hr
A job with 20 PTO days is worth $2.40/hr more than one with 0 PTO
at the same $60,000 salary.
Example 3: Overtime Calculation
Hourly worker with regular overtime:
Base rate: $25/hr
Regular hours: 40/week
Overtime hours: 10/week (at 1.5× rate)
Weeks worked: 52
Regular pay: 40 hrs × $25 × 52 weeks = $52,000
Overtime pay: 10 hrs × $37.50 × 52 weeks = $19,500
Total annual: $71,500
Effective hourly rate: $71,500 / 2,600 hours = $27.50/hr
Comparison: Same worker without overtime = $52,000/year
Overtime premium: +$19,500/year (+37.5%)