Your offer letter says $72,000 per year. Your friend’s contract says $38 an hour. Who makes more? It’s not as obvious as it seems — and knowing how to convert between the two is essential for making smart career decisions.
The Basic Formula
Hourly Rate = Annual Salary ÷ 2,080
Where does 2,080 come from? That’s 52 weeks × 40 hours per week — the standard full-time work year in the US.
Common salary-to-hourly conversions:
| Annual Salary | Hourly Rate | Monthly Take-Home (est.) |
|---|---|---|
| $35,000 | $16.83 | ~$2,400 |
| $45,000 | $21.63 | ~$3,000 |
| $55,000 | $26.44 | ~$3,600 |
| $65,000 | $31.25 | ~$4,200 |
| $75,000 | $36.06 | ~$4,800 |
| $85,000 | $40.87 | ~$5,400 |
| $100,000 | $48.08 | ~$6,200 |
Monthly take-home estimates assume roughly 25-30% combined federal, state, and payroll taxes.
The Quick Mental Math Trick
To estimate your hourly rate from salary: Drop the last three zeros and divide by 2.
- $60,000 → 60 ÷ 2 = ~$30/hour (actual: $28.85)
- $80,000 → 80 ÷ 2 = ~$40/hour (actual: $38.46)
- $100,000 → 100 ÷ 2 = ~$50/hour (actual: $48.08)
It’s not exact, but it gets you close enough for quick comparisons.
To estimate salary from hourly rate: Double the rate and add three zeros.
- $25/hour → 25 × 2 = ~$50,000/year (actual: $52,000)
- $35/hour → 35 × 2 = ~$70,000/year (actual: $72,800)
Your Real Hourly Rate (The Honest Version)
The formula above assumes you work exactly 40 hours a week. But many salaried employees work more. If you regularly put in 50-hour weeks, your effective hourly rate drops significantly.
$75,000 salary at different weekly hours:
- 40 hours/week: $36.06/hour
- 45 hours/week: $32.05/hour
- 50 hours/week: $28.85/hour
- 55 hours/week: $26.22/hour
- 60 hours/week: $24.04/hour
A salaried employee working 60-hour weeks at $75,000 makes less per hour than someone earning $25/hour at 40 hours.
Comparing Job Offers: Beyond the Number
When evaluating offers, salary or hourly rate is just one piece. Consider:
Health insurance — Employer-provided health coverage is worth $6,000-$20,000/year. An hourly job without benefits might actually pay less when you factor in buying your own insurance.
Retirement match — A 5% 401(k) match on a $70,000 salary adds $3,500/year in free money.
Paid time off — Two weeks of PTO on a salaried job means you’re still paid for 52 weeks of work. An hourly worker taking two weeks off loses two weeks of pay.
Overtime — Hourly workers often earn 1.5× their rate for overtime hours. If you consistently work 50+ hours, an hourly position might earn more than a comparable salary.
Freelancer Rate Calculation
If you’re freelancing or consulting, your rate needs to be higher than an employee rate to cover:
- Self-employment tax (~15.3%)
- Health insurance ($300-800/month)
- No paid vacation or sick days
- Business expenses
- Unpaid time spent on admin, marketing, invoicing
Rule of thumb: Multiply the employee hourly rate by 1.3-1.5 to get a freelance rate.
An employee making $40/hour should freelance at $52-60/hour to have equivalent take-home pay.
Calculate Your Rate
Use our free salary calculator to instantly convert between annual, monthly, biweekly, weekly, and hourly rates. For budgeting your income, try our percentage calculator to split your paycheck using the 50/30/20 rule.
This article is for informational purposes only and does not constitute financial advice.