Hourly to Salary Calculator - Pay Rate Converter

Hourly vs. salaried pay: what's the difference?

Hourly workers are paid for the exact number of hours worked and typically receive overtime pay (1.5× rate) for hours beyond 40 per week under the FLSA. Salaried employees receive a fixed annual amount regardless of hours worked, though many salaried workers are exempt from overtime protections.

Common pay periods explained

Employers use several pay schedules: weekly (52 checks/year), bi-weekly (every two weeks, 26 checks/year), semi-monthly (twice a month, 24 checks/year), and monthly (12 checks/year). Bi-weekly and semi-monthly are the most common in the United States. Note that with bi-weekly pay, two months each year will have three paychecks.

How hours per year affects your effective rate

A standard full-time year is 2,080 hours (40 hrs/week × 52 weeks). If your employer provides paid time off but you want your effective hourly rate based on hours actually worked, subtract vacation and holiday hours when setting weeks per year. For example, 2 weeks vacation + 10 holidays ≈ 49 productive weeks, or about 1,960 hours.

Quick reference table

Common benchmarks for a 40-hour, 52-week year:

• $15/hr -> $31,200/year
• $20/hr -> $41,600/year
• $25/hr -> $52,000/year
• $50,000/year -> ~$24.04/hr
• $75,000/year -> ~$36.06/hr

Benefits valuation

Employer-provided benefits add substantial value beyond base salary that is easy to overlook when comparing offers. Key components to quantify:

• Health insurance: employer contributions average ~$7,000/year for single coverage and ~$20,000/year for family coverage (KFF 2023 Employer Health Benefits Survey).
• 401(k) matching: a 50% match up to 6% of salary is worth 3% of your annual pay - on a $60,000 salary that's $1,800/year in free money.
• Paid time off (PTO): two weeks of PTO on a $50,000 salary is worth ~$1,923 in paid leave.

A $50,000 salary with comprehensive benefits can easily exceed the effective compensation of a $60,000 contract-only position when these are valued properly.

Contractor vs. employee comparison

Independent contractors typically earn 20–30% higher hourly rates to offset costs that employers normally cover:

• Self-employment tax: contractors pay both the employee and employer portions of Social Security and Medicare - 15.3% on net earnings.
• No employer benefits: health insurance, retirement contributions, and PTO must be self-funded.
• No paid downtime: gaps between contracts, sick days, and holidays are unpaid.

A general rule of thumb: multiply your target effective hourly rate by 1.4–1.5 to arrive at a fair contractor billing rate.