How to Convert Hourly Wage to Annual Salary
The standard formula for converting an hourly rate to annual salary assumes a full-time work schedule of 40 hours per week for 52 weeks of the year, totaling 2,080 working hours.
For example, a $25/hour wage at 40 hours/week equals $52,000 per year before taxes. Add overtime and the number climbs quickly.
Understanding Overtime in Your Annual Calculation
Under the Fair Labor Standards Act (FLSA), most non-exempt employees must receive overtime pay at 1.5× their regular rate for all hours worked beyond 40 in a workweek. Some employers offer double-time (2×) for holidays or excessive hours.
If you regularly work 5 overtime hours per week at $25/hour with 1.5× overtime pay:
- Regular pay: $25 × 40 × 52 = $52,000
- Overtime pay: $37.50 × 5 × 52 = $9,750
- Total: $61,750/year
💡 Freelancers & contractors: Your effective hourly rate should be higher than an employee's to account for self-employment taxes (~15.3%), no paid time off, and your own benefits costs. Use this calculator as your baseline, then add 25–35% for a realistic freelance rate.
Hourly to Salary Questions Answered
Typical Hourly Rates by Industry (2026)
Not sure if your rate is competitive? Here's a quick reference for median hourly wages across common sectors in the United States, based on Bureau of Labor Statistics data:
| Industry | Median Hourly | Annual Equivalent |
|---|---|---|
| Software & IT | $52 – $75 | $108K – $156K |
| Registered Nursing | $38 – $50 | $79K – $104K |
| Skilled Trades | $22 – $38 | $46K – $79K |
| Retail & Food Service | $14 – $20 | $29K – $42K |
| All Occupations (median) | $23 | $47,840 |
Hourly vs Salaried: What Changes?
Converting to a salaried role at the same annual pay isn't always a straightforward upgrade. Here are the key differences that affect your effective compensation:
- Overtime eligibility: Hourly workers automatically qualify for 1.5× overtime under FLSA. Most salaried workers earning above $35,568/year (2026 DOL threshold) are classified as exempt — no overtime required by law.
- Predictability: Salaried roles guarantee fixed income regardless of hours. Hourly workers earn less in short weeks but more during overtime periods.
- Benefits access: Salaried positions more frequently include health insurance, 401(k) matching, and paid time off — add 20–30% to compare total compensation fairly.
- Taxes: Both hourly and salaried workers pay the same federal income tax rates. The difference is only in how payroll withholding is calculated each period.
💡 Quick rule of thumb: Divide any annual salary by 2,000 for a fast hourly estimate. A $60,000 salary ÷ 2,000 = $30/hour — close enough for quick job offer comparisons before you run the full numbers here.