Money · 5 minute read

How to turn an hourly wage into a yearly salary

The quick calculation is hourly pay × weekly hours × working weeks. The useful answer also accounts for unpaid time off, overtime, and the difference between gross and take-home pay.

The basic hourly-to-yearly formula

Start with the number of hours normally worked each week. Multiply that by the hourly rate to get weekly gross pay. Then multiply weekly pay by the number of paid working weeks in the year.

A full-time schedule is often estimated as 40 hours a week for 52 weeks, or 2,080 hours a year. That shortcut is useful, but it assumes every week is paid.

Example calculations

$15 per hour

$15 × 40 × 52 = $31,200 per year. That is about $2,600 per month before taxes and deductions.

$25 per hour

$25 × 40 × 52 = $52,000 per year. Weekly gross pay is $1,000, and average monthly gross pay is about $4,333.

$35 per hour

$35 × 40 × 52 = $72,800 per year. Weekly gross pay is $1,400, and average monthly gross pay is about $6,067.

What changes the real number?

• Unpaid time off: If two weeks are unpaid, use 50 weeks instead of 52.
• Changing schedules: Use your average weekly hours when shifts vary.
• Overtime: Calculate overtime hours separately at the actual overtime rate, then add them.
• Bonuses and tips: Add only income you reasonably expect to receive.
• Taxes and benefits: The formula gives gross pay, not the amount deposited into your bank account.

Gross pay is not take-home pay

Gross pay is earnings before deductions. Take-home pay is what remains after items such as federal and local taxes, Social Security and Medicare taxes, insurance, and retirement contributions. Two people with the same gross salary can have different take-home pay because their locations, benefits, and withholding choices differ.

How to estimate a monthly amount

Divide annual gross pay by 12 for an average monthly figure. Do not multiply weekly pay by four: most months are longer than exactly four weeks, so that shortcut understates the monthly average. If you are paid every two weeks, there are normally 26 pay periods in a full year.