How hourly pay becomes a salary
Work out one year of pay, then split it into the pay periods you want. The number of periods is arithmetic: 12 months, 24 semimonthly checks, 26 biweekly checks, 52 weeks.
Annual pay = hourly rate × hours per week × paid weeks per year
Pay per period = annual pay ÷ periods per year (12, 24, 26 or 52). Daily pay = pay for a week worked ÷ days worked per week. Overtime pay = overtime hours × rate × multiplier × paid weeks, added separately.
Example: a full-time year
$22.50 an hour, 40 hours a week, 52 paid weeks, 5 days a week.
- Week: $22.50 × 40 = $900.00
- Year: $900.00 × 52 = $46,800.00
- Monthly: $46,800.00 ÷ 12 = $3,900.00; semimonthly: ÷ 24 = $1,950.00; biweekly: ÷ 26 = $1,800.00; weekly: ÷ 52 = $900.00
- Daily: $900.00 ÷ 5 = $180.00
Example: fewer paid weeks and a four-day week
$30.00 an hour, 36 hours a week over 4 days, 50 paid weeks.
- Week worked: $30.00 × 36 = $1,080.00
- Year: $1,080.00 × 50 = $54,000.00; monthly $4,500.00
- Daily: $1,080.00 ÷ 4 = $270.00
Example: with overtime
$20.00 an hour, 40 regular hours and 5 overtime hours a week at 1.5×, 52 paid weeks.
- Regular pay: $20.00 × 40 × 52 = $41,600.00
- Overtime rate: $20.00 × 1.5 = $30.00; a week: 5 × $30.00 = $150.00; a year: $7,800.00
- Total: $41,600.00 + $7,800.00 = $49,400.00
Questions
How do I convert an hourly wage to an annual salary?
Multiply the hourly rate by the hours you work in a week and by the paid weeks in a year. At $22.50 an hour for 40 hours, 52 weeks, that is $46,800 a year before tax.
Why isn’t monthly pay just weekly pay × 4?
A year has 52 weeks, which is about 4.33 weeks a month, not 4. So monthly pay is the yearly pay divided by 12. Weekly × 4 would leave out about four weeks of pay a year.
Biweekly or semimonthly: what’s the difference?
Biweekly means every two weeks, 26 paychecks a year. Semimonthly means twice a month, 24 paychecks a year. The yearly total is the same; each semimonthly check is a little larger.
How do I handle unpaid time off?
Lower the paid weeks per year. If you take two unpaid weeks, enter 50. The weekly, biweekly and other figures are then the year spread evenly over the usual number of pay periods.
How does overtime work here?
Enter the overtime hours you work in a typical week and the pay multiplier. 1.5 means time and a half. Overtime is added on top and shown separately. Whether and how overtime is paid depends on your job and employer, so use your own pay rules.
Is this before or after tax?
Before. Every figure is gross pay. To see take-home pay after Social Security, Medicare and income tax, use the paycheck calculator.
How do I go the other way, salary to hourly?
Divide the yearly salary by hours per week × paid weeks. $52,000 over 40 hours and 52 weeks is $25 an hour.