Why rate × 2,080 is usually wrong
The standard conversion multiplies an hourly rate by 2,080 hours, which is 40 hours a week for all 52 weeks of the year. It is the right number for a full-time employee whose paid time off is paid — a salaried worker taking two weeks' holiday still receives 52 weeks of pay, so 2,080 holds.
It stops holding the moment any week is unpaid. An hourly worker who takes two unpaid weeks is paid for 50 weeks, not 52, and the annual figure falls by 3.85% (2 ÷ 52). Seasonal shutdowns, gaps between contracts and unpaid parental leave all work the same way. This is the single largest source of error when people compare an hourly offer against a salary, because the salary figure quietly includes paid time off and the hourly figure does not.
The second complication runs the other way. Under the Fair Labor Standards Act, a non-exempt employee must be paid at least one and a half times their regular rate for every hour beyond 40 in a workweek. Regular overtime can lift annual income well above the straight-time figure — five hours a week at time and a half adds 18.75% to a 40-hour year, because 5 × 1.5 = 7.5 hours of pay against 40. The calculator reports the annual figure with and without overtime so that dependence is visible.
The formula, one term at a time
Start with the week, because that is the unit the FLSA uses. A workweek is a fixed, recurring period of 168 hours, and overtime is assessed within it — not across a two-week pay period, and not by averaging.
Straight-time pay is the hourly rate times regular hours: $25 × 40 = $1,000. Overtime pay is the rate times the multiplier times overtime hours: $25 × 1.5 × 5 = $187.50. Those two added together give gross pay for one week worked.
Paid weeks is 52 minus the weeks you expect not to be paid. Multiply weekly gross by paid weeks and you have the annual figure. Everything else is division: monthly gross is the annual divided by twelve regardless of payroll frequency, and gross per paycheck is the annual divided by the number of checks — 52, 26, 24 or 12.
Those last two are different numbers and people conflate them constantly. A biweekly payroll issues 26 checks, which is 2.1667 checks a month on average, so a biweekly check is not half of a monthly figure. It also means two months each year contain three paydays. A semimonthly payroll issues exactly 24 checks, always two a month, and each is larger than a biweekly check for the same salary because the same annual total is divided into fewer pieces.
One caution about the overtime field: enter only the hours actually paid at a premium. If you work 45 hours and all 45 are paid at straight time, put 45 in the regular field — that is what an exempt salaried arrangement looks like. If 40 are straight and 5 carry a premium, split them. Putting premium hours in the regular field understates your income; putting straight hours in the overtime field overstates it.
Worked example: $25 an hour with five hours of weekly overtime
You earn $25 an hour, work 40 regular hours plus 5 hours of overtime at time and a half most weeks, take no unpaid time off, and are paid biweekly.
- Straight-time week. $25 × 40 = $1,000.
- Overtime week. The overtime rate is $25 × 1.5 = $37.50 an hour, so 5 hours pays $37.50 × 5 = $187.50.
- Weekly gross. $1,000 + $187.50 = $1,187.50.
- Paid weeks. 52 − 0 = 52.
- Annual gross. $1,187.50 × 52 = $61,750.
- Without overtime. $1,000 × 52 = $52,000, so overtime contributes $9,750, which is $9,750 ÷ $61,750 = 15.79% of gross pay.
- Per paycheck. $61,750 ÷ 26 = $2,375. Monthly average is $61,750 ÷ 12 = $5,145.83.
- Hours a year. (40 + 5) × 52 = 2,340, which is 260 hours — six and a half working weeks — more than a standard 2,080-hour year.
Two facts fall out of this that matter for a job comparison. The salary-equivalent figure is $61,750, but it is only reliable while the overtime lasts. And the effective rate across all hours worked is $61,750 ÷ 2,340 = $26.39 an hour, which is what to compare against a salaried role that expects 40 hours.
How to read the result against a salary offer
Compare like for like on paid time off. A $60,000 salary usually includes paid holidays, paid vacation and paid sick leave. An hourly job at $28.85 (which is $60,000 ÷ 2,080) pays nothing on those days. If the hourly role effectively gives you three unpaid weeks a year, the comparable rate is $60,000 ÷ (40 × 49) = $30.61 an hour, not $28.85. Enter the unpaid weeks and let the calculator do that adjustment.
Separate the reliable income from the contingent income. The annual gross without overtime output is the figure your rent has to fit inside. Overtime is the first thing to disappear when orders slow, and a household budget built on 2,340 hours breaks when the schedule returns to 2,080. Budget on straight time and treat overtime as savings, which is exactly the split the 50/30/20 budget calculator asks you to make.
Gross is not take-home. Federal income tax, Social Security and Medicare (7.65% combined on wages up to the Social Security wage base), state and local tax, and any health or retirement deductions all come out before the money reaches you. Run the annual figure through the take-home pay calculator to see the deposited amount.
If you are self-employed, this figure is not comparable at all. A contractor billing $25 an hour pays both halves of Social Security and Medicare, funds their own health insurance and retirement, and bills fewer hours than they work. The freelance hourly rate calculator works out the rate that actually replaces an employed salary.
Hourly rate to annual salary at 2,080 hours
| Hourly rate | Annual | Monthly | Biweekly | Weekly |
|---|---|---|---|---|
| $15.00 | $31,200 | $2,600.00 | $1,200 | $600 |
| $18.00 | $37,440 | $3,120.00 | $1,440 | $720 |
| $20.00 | $41,600 | $3,466.67 | $1,600 | $800 |
| $22.00 | $45,760 | $3,813.33 | $1,760 | $880 |
| $25.00 | $52,000 | $4,333.33 | $2,000 | $1,000 |
| $30.00 | $62,400 | $5,200.00 | $2,400 | $1,200 |
| $35.00 | $72,800 | $6,066.67 | $2,800 | $1,400 |
| $40.00 | $83,200 | $6,933.33 | $3,200 | $1,600 |
| $50.00 | $104,000 | $8,666.67 | $4,000 | $2,000 |
| $75.00 | $156,000 | $13,000.00 | $6,000 | $3,000 |
| $100.00 | $208,000 | $17,333.33 | $8,000 | $4,000 |
Each row is rate × 2,080 for the annual column, divided by 12, 26 and 52 for the others. Every extra $1 an hour is worth exactly $2,080 a year on this schedule.
What the FLSA requires
The Fair Labor Standards Act sets a federal minimum wage of $7.25 an hour and requires overtime pay of at least one and a half times the regular rate for hours worked beyond 40 in a workweek for non-exempt employees. Several details are routinely misunderstood:
- Overtime is weekly, not daily. Federal law does not require a premium for a long single day, only for exceeding 40 hours in the workweek. Some states, notably California, add a daily threshold.
- The "regular rate" is not always the base rate. Non-discretionary bonuses, shift differentials and commissions must be folded into it before the multiplier is applied, which raises the overtime rate above 1.5 times base pay.
- Paid time off does not count towards the 40. A week with 8 hours of holiday pay and 36 hours worked contains no overtime under federal law, because only hours actually worked count.
- Job titles do not determine exemption. Whether an employee is exempt depends on salary level, how they are paid, and their actual duties. Many states set a higher minimum wage than the federal floor, and where the two differ the higher applies.
What this calculator leaves out
- Taxes and deductions. Every figure here is gross. Payroll tax alone removes 7.65% of wages for Social Security and Medicare before income tax is applied.
- Shift differentials and bonuses. A night or weekend premium raises both your straight-time pay and your FLSA regular rate. Blend it into the hourly rate field if it applies to most of your hours.
- Tips and commission. Variable pay does not fit a fixed weekly model. Use a conservative average and treat the excess as upside.
- Benefits. Employer-paid health insurance, retirement matching and paid leave can be worth a substantial share of cash pay, and hourly roles often provide less of all three. Compare total compensation, not just the wage.
- Weeks with partial hours. The model applies the same schedule to every paid week. A week at 24 hours instead of 40 reduces the annual figure and is easiest to handle by entering an average across the year.
- The 27-paycheck year. Because 52 weeks is 364 days, a biweekly payroll produces 27 checks roughly every 11 years. It does not change your rate, but it changes that year's cash flow.
Going the other way, and what to check next
To convert in the opposite direction, divide the salary by the hours it actually buys. A $75,000 salary at 40 hours a week is $75,000 ÷ 2,080 = $36.06 an hour; at the 50 hours the job really takes, it is $75,000 ÷ 2,600 = $28.85. The salary to hourly calculator handles that conversion including paid leave, and it is the honest way to compare two offers with different expected hours.
If overtime is a large part of your income, model it directly rather than as an annual average. The overtime pay calculator applies the FLSA regular-rate rules week by week, including the blended rate that results from bonuses and differentials.
If you are weighing an offer in another city, the annual figure means nothing until it is adjusted for what it costs to live there. A $70,000 offer in a high-cost metro can be worth less than $55,000 elsewhere once housing and tax are accounted for; the cost of living comparison calculator makes that trade explicit.
And once you have a reliable annual number, the useful next question is what a raise is worth against it. A percentage increase on an hourly rate flows straight through to the annual figure at the same percentage, provided your hours do not change — the pay raise percentage calculator shows the dollar effect per paycheck and whether the increase keeps ahead of inflation.