How to Calculate Your Salary (Hourly to Annual and Everything Between)

A job posting says “$65,000/year” and another says “$32/hour.” Which one pays more? Trick question — you can't tell without knowing the hours. And even then, you need to account for taxes, benefits, and time off to figure out what actually lands in your bank account.

Salary math seems straightforward until you actually start digging into it. Here's how to convert between any pay format, estimate your take-home pay, and understand what your total compensation is really worth.

The Conversion Formulas

All of these assume a standard 40-hour work week and 52 weeks per year (2,080 total working hours). They're gross numbers — before taxes and deductions.

• Hourly to annual: hourly rate × 2,080
• Hourly to monthly: hourly rate × 173.33 (2,080 ÷ 12)
• Hourly to biweekly: hourly rate × 80
• Annual to hourly: annual salary ÷ 2,080
• Annual to monthly: annual salary ÷ 12
• Annual to biweekly: annual salary ÷ 26

Some quick reference points at common hourly rates:

Our salary calculator does all these conversions instantly, including estimated take-home pay after federal taxes.

The Real Calculation: PTO, Holidays, and Unpaid Time Off

The 2,080-hour assumption (40 hours × 52 weeks) assumes you work every single week of the year. Nobody does. A typical full-time job in the US includes:

• 10 paid holidays (federal holidays are standard)
• 10-15 days of paid time off (PTO/vacation)
• 5-10 sick days

If you get 10 holidays and 15 days of PTO, that's 25 days off, or 200 hours. Your actual working hours are 2,080 − 200 = 1,880 hours. So if your offer says $75,000/year, your effective hourly rate (based on hours actually worked) is $75,000 ÷ 1,880 = $39.89/hour, not $36.06/hour (which is what you'd get dividing by 2,080).

This matters when you're comparing an hourly job to a salaried job. An hourly contractor at $40/hour who gets no paid time off needs to account for the fact that they won't get paid for holidays or vacation days. That $40/hour is really worth less than a $75,000 salaried position when you factor in the paid time off.

On the flip side, some salaried jobs expect 45-50 hour weeks without overtime pay. If you're salaried at $75,000 but regularly working 50 hours, your effective hourly rate drops to $28.85/hour (75,000 ÷ 2,600). Always ask about expected hours during interviews.

Taxes Change Everything

The difference between gross pay and net pay (take-home) is enormous. Here's a realistic breakdown for a single filer earning $75,000 in 2026, paid biweekly:

• Gross biweekly pay: $2,884.62 (75,000 ÷ 26)
• Federal income tax: ~$430 (effective rate varies, but the marginal brackets for a single filer at this income put most of it in the 22% bracket)
• FICA (Social Security + Medicare): ~$219.23 (7.65% total — 6.2% for Social Security up to the wage base, 1.45% for Medicare)
• State income tax: varies wildly by state. California: ~$230. Texas, Florida, Washington: $0. Illinois: ~$115.
• Health insurance premium: ~$100-300 depending on your plan and employer contribution
• 401(k) contribution: if you put in 5%, that's $144.23 per paycheck

For someone in a state with moderate income tax (say, Illinois), the biweekly take-home might look something like:

• Gross: $2,884.62
• Federal tax: −$430
• FICA: −$219
• State tax: −$115
• Health insurance: −$150
• 401(k): −$144
• Net biweekly: ~$1,827

That's $1,827 × 26 = $47,502/year take-home out of a $75,000 gross salary. You keep roughly 63% of what you earn. The exact number depends on your state, your pre-tax deductions, and your filing status, but 60-70% is the typical range for a mid-level salary.

Our income tax calculator can give you a more precise estimate based on your specific situation and filing status.

Benefits Are Part of Your Real Compensation

When you're evaluating a job offer, the salary number is only part of the picture. Employer-provided benefits have real dollar value, and ignoring them means you're undervaluing the offer. Here's what to consider:

• Health insurance: The average employer contribution for single coverage is around $7,900/year (2025 KFF data). For family coverage, it's over $15,000. This is money you'd otherwise be spending out of pocket. A job offering $70,000 with good health insurance might be worth more than an $80,000 job where you're buying insurance on the individual market.
• 401(k) match: If your employer matches up to 5% of your salary and you earn $75,000, that's $3,750/year in free money. It's part of your compensation even though it doesn't show up in your paycheck.
• Stock options/RSUs: Common at tech companies and startups. These can be worth nothing (if the company fails) or worth multiples of your salary (if the company grows). The vesting schedule matters — you usually don't own all of it on day one.
• Paid parental leave: In the US, there's no federal mandate for paid parental leave. Companies that offer it (typically 6-12 weeks) are providing a significant benefit. At your salary, 8 weeks of paid leave is worth about $11,500.
• Commute reimbursement, gym stipends, education reimbursement: These are smaller but add up. $100/month for transit plus $50/month for a gym membership is $1,800/year.

The total compensation approach: take the salary, add the employer health insurance contribution, add the 401(k) match, add any other cash-equivalent benefits, and then compare offers. A $75,000 job with full benefits might have a total compensation value of $90,000+, while a $80,000 job with minimal benefits might only be worth $83,000 in total.

How to Negotiate Salary

Most people leave money on the table during salary negotiations because they're uncomfortable asking for more or don't know what to ask for. Here's the approach that works:

Know your number before the conversation.Research what people in your role, industry, and location actually earn. Use Glassdoor, Levels.fyi (for tech), Payscale, and Bureau of Labor Statistics data. Know the range — the 25th percentile, median, and 75th percentile for your position. Aim for the 60th-75th percentile if you have strong experience.

Never give the first number.If they ask “what are your salary expectations?,” deflect: “I'd like to learn more about the role and responsibilities before discussing numbers. Could you share the range you have in mind?” If they press, give a range where the bottom of your range is what you'd actually accept. Never anchor low.

Negotiate the total package, not just base salary.If they can't move on base salary, ask about signing bonuses, additional PTO, remote work flexibility, a 401(k) match increase, or a review after six months instead of twelve. These all have real value and are often easier for managers to approve than a higher base salary.

Get everything in writing.Verbal promises about future raises and bonuses are worth the paper they're printed on (which is to say, nothing). If they agree to something during negotiation, make sure it appears in your offer letter.

Practice.Salary negotiation is a skill, and like any skill, you get better with practice. Rehearse your talking points out loud. Role-play with a friend. The more comfortable you are saying “I was hoping for something closer to $X,” the better you'll do when it counts.

Frequently Asked Questions

How much is $30 an hour annually?

Before taxes, $30/hour × 2,080 hours = $62,400/year. After federal taxes, FICA, and moderate state taxes, you'd take home roughly $46,000-48,000/year, or about $1,770-1,846 per biweekly paycheck. The exact number depends on your state, filing status, and deductions. Use our salary calculator for a personalized estimate.

Is $70,000 a good salary?

It depends entirely on where you live and what stage of life you're in. The median household income in the US is about $80,000 (2024 data), so $70,000 as an individual puts you above the median for single earners. In a low-cost area like rural Ohio or Mississippi, $70,000 goes very far. In San Francisco or New York, it's tighter but still workable if you don't have high debt payments. As a starting salary in most fields, $70,000 is solid. As a mid-career salary in tech or finance, it's below market.

How do I calculate salary after taxes?

Start with your gross annual salary, subtract federal income tax (based on your tax brackets and filing status), subtract FICA (7.65%), subtract state income tax (if applicable — seven states have none), and subtract any pre-tax deductions like 401(k) contributions and health insurance premiums. Our income tax calculatorhandles the federal portion. For state taxes, you'll need to look up your state's specific brackets, as they vary dramatically (California's top rate is 13.3%, while Texas, Florida, and several others charge $0).

What's the difference between gross and net pay?

Gross pay is the total amount you earn before any deductions. Net pay (take-home pay) is what actually hits your bank account after federal taxes, state taxes, FICA, health insurance, retirement contributions, and any other deductions are taken out. For most people, net pay is about 60-70% of gross pay. When someone says “I make $75,000,” they almost always mean gross. Their actual take-home is probably closer to $47,000-52,000 depending on their state and deductions.

Should I negotiate salary for a first job out of college?

Absolutely. Entry-level salaries often have more room for negotiation than people think, because the difference between $55,000 and $62,000 is relatively small to a company but significant to you. Research what your specific role pays at similar companies using Glassdoor and college career center data. Aim 10-15% above the initial offer and be prepared to justify it with your skills, internships, or relevant projects. The worst they can say is no, and most employers expect some negotiation. Not negotiating can cost you hundreds of thousands of dollars over your career because future raises are usually percentage-based on your starting salary.

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