Annual Income Calculator

How annual income is built from an hourly wage

Annual income from an hourly job is three numbers multiplied together: the hourly rate, the hours worked in a week, and the number of weeks you are paid for. Twenty dollars an hour times 40 hours is $800 a week. Multiply that by 52 weeks and the year pays $41,600. The calculator above runs that multiplication, then separates regular hours from overtime and applies an estimated tax rate so you can see both the gross figure and the money that reaches your bank account.

Two choices decide whether the answer is right. The first is whether all 52 weeks are paid, because most hourly workers take at least some time off without pay. The second is whether the weekly hours already include overtime, which is paid at a different rate. Get either one wrong and the yearly figure can be off by a few thousand dollars.

This conversion is something you have to do yourself, because the Bureau of Labor Statistics wage survey reports hourly wages for most hourly occupations rather than annual salaries. Median hourly pay across all US occupations sat near $23 in the May 2024 release, which is $47,840 at 40 hours a week for 52 weeks.

52 weeks or 50 weeks: what paid time off does to the number

The standard full-time year is 2,080 hours, and that number comes from 40 hours times 52 weeks. It assumes you are paid for every week of the year, including the weeks you spend on vacation. That assumption holds only when the time off is paid.

Federal law does not require paid vacation, paid holidays or paid sick leave. The Fair Labor Standards Act sets the overtime rule and the minimum wage, and it leaves vacation policy to the employer. Many hourly jobs therefore pay for 50 weeks or fewer, and the gap is easy to miss.

• All time off paid: use 52 weeks. The yearly figure is the full $41,600 at $20 an hour.
• Two weeks unpaid: use 50 weeks. The same job pays $40,000, which is $1,600 less.
• Ten unpaid days spread through the year: use 50 weeks as well, since 10 working days is two 5-day weeks.
• Seasonal work: use the actual number of weeks on the payroll. A summer job that runs 14 weeks at 40 hours pays $11,200 at $20 an hour.

The gap grows with the wage. At $30 an hour, two unpaid weeks cost $2,400 a year, and at $40 an hour they cost $3,200. That is why a job advertised at a higher hourly rate can pay less than one with a lower rate and paid holidays, and it is worth asking about paid leave before comparing two offers.

One more wrinkle: a calendar year is 365 days, which is 52.14 weeks, not 52. The federal government handles the leftover by dividing an annual salary by 2,087 hours to get an hourly rate, as the Office of Personnel Management explains. For a household budget, 2,080 hours is close enough, and it keeps the arithmetic simple.

Worked example: $20 an hour at 52, 50, 48 and 46 weeks

Hold the wage and the weekly hours steady and change only the number of paid weeks. At $20 an hour for 40 hours a week, each paid week is worth $800.

The spread from 52 weeks to 46 weeks is $4,800, which is 11.5% of the top figure. Nothing about the job changed except how many weeks it pays for. When you compare two hourly offers, put both on the same week count first, then look at the rate.

Part-year work needs the same treatment in reverse. Someone who works 30 hours a week for 26 weeks at $20 earns $15,600, and spreading that over 12 months gives $1,300 a month. The monthly figure is what a budget needs, even when the work itself is seasonal.

Overtime at 1.5 times and how it changes the total

Overtime is 1.5 times the regular rate for every hour past 40 in a workweek, and it is required for most hourly employees under federal law. At a $20 base rate the overtime rate is $30. Five overtime hours in a week add $150, and across 52 weeks that is $7,800 on top of the $41,600 base, for $49,400.

The effective hourly rate is the honest way to compare a job with heavy overtime to one without. Divide total pay by total hours. At $20 an hour with 5 overtime hours a week you work 2,340 hours and earn $49,400, which is $21.11 an hour. With 10 overtime hours a week the total reaches $57,200 over 2,600 hours, or $22.00 an hour.

Overtime is calculated on the regular rate, not always on the base wage. Nondiscretionary bonuses, shift differentials and production bonuses are folded into the regular rate before the 1.5 multiplier is applied. A worker paid $20 an hour who also earns a $40 weekly attendance bonus has a regular rate of $21, so overtime is $31.50 an hour rather than $30. The difference is small per hour and adds up over a year of steady overtime.

Some states set a daily overtime threshold as well. California, for example, requires 1.5 times pay after 8 hours in a day, which can push overtime higher than the federal 40-hour rule alone would. The Department of Labor fact sheet on overtime spells out the federal floor, and a state labor office covers anything above it.

Gross pay versus take-home pay

Everything above is gross pay, the number before a single deduction. Take-home pay is what lands in the account, and the gap is large enough to plan around.

Three things come out. Social Security takes 6.2% and Medicare 1.45%, which is 7.65% of gross pay for most employees and stops rising no matter the wage. Federal income tax is withheld on a sliding scale, and the IRS withholding estimator turns your paycheck details into a projected tax bill. State income tax applies in most states, and a few cities add their own.

A single worker with no dependents and a standard deduction often lands near 20% to 25% combined. At a 22% rate, $41,600 gross leaves $32,448 a year, or $2,704 a month. At the same rate, the $49,400 overtime figure leaves $38,532, which is $3,211 a month.

Deductions that are not taxes come out too. Health insurance premiums, retirement contributions and union dues are taken after the tax line on most pay stubs, and they can move a check by $100 to $300 a month. The calculator has one tax field on purpose: enter the combined rate from your pay stub, including state tax, and the after-tax line lands close to reality.

Hourly rate to yearly pay at a glance

These are the figures for a 40-hour week across 52 paid weeks, which is the 2,080-hour standard year. Use them as a sanity check on the calculator, or when you only need a rough number.

The rule of thumb that falls out of this table is $2,080 per dollar of hourly pay. A $1 raise is $2,080 a year, or about $173 a month before tax. Working backward, divide a salary by 2,080 to get the hourly equivalent: $52,000 becomes $25 an hour.

Part-time, seasonal and variable schedules

Not every job runs 40 hours for 52 weeks, and the calculator handles the rest as long as you feed it honest inputs.

• Part-time at 25 hours: $20 times 25 times 52 is $26,000. The monthly figure is $2,166.67, and overtime only starts after 40 hours in the week, so a part-time schedule rarely reaches it.
• School-year work: 38 weeks at 35 hours and $22 an hour is $29,260. Spread over 12 months that is $2,438.33 a month, which is the number a household budget should use.
• Two jobs: run each one separately and add the gross totals. Overtime is counted per employer, not across both, so 30 hours at one job and 20 at another does not trigger overtime at either.
• Variable weeks: average four recent weeks. Hours of 32, 40, 38 and 42 average 38, which at $20 an hour and 52 weeks is $39,520.

Self-employment needs one extra step, because the employer half of Social Security and Medicare lands on you. That is 7.65% on top of the employee share, plus income tax on the profit, and it is why a $41,600 freelance year does not feel like a $41,600 salary.

What the number is good for, and where it misleads

The annual figure is a planning tool, not a promise. It is the right number for comparing offers, setting a rent budget, or checking whether a side job is worth the hours. Landlords and lenders use gross annual income for the same reason: it is the one figure that is easy to verify from pay stubs and tax returns.

It misleads in three places. Overtime is not guaranteed, so a year built on 10 extra hours a week can drop by $15,600 if the overtime disappears. Hours get cut in slow seasons, which changes the week count as well as the weekly total. And gross pay is not spendable pay, so a budget built on $41,600 when $32,448 arrives will not survive the first month.

This is an estimate for planning. Tax rates, overtime rules and benefit costs vary by state and employer, so confirm the real numbers on a pay stub or with a tax professional before you commit to a lease, a loan or a budget.