The standard full time assumption is 2,080 hours per year, 8 hours per day, 5 days per week, 52 weeks. However, this does not account for vacation time, public holidays, or sick leave. If you have 15 vacation days and 10 federal holidays, your actual paid working hours drop to about 1,800 per year. This calculator lets you enter your specific vacation days to get a more accurate hourly equivalent.

Employers typically state hourly rates for regular hours only, not including overtime, bonuses, or benefits. When you convert an annual salary that includes bonuses and employer paid benefits (health insurance, pension contributions, stock options), the total compensation package is higher than the base salary. Conversely, a stated hourly rate multiplied by 2,080 gives the gross full time equivalent, actual take home is lower after tax and deductions.

Freelancers and contractors need to account for benefits they pay themselves: self employment tax (additional 7.65% in the US), health insurance, retirement contributions, and the fact that they rarely bill every working hour (non billable time for admin, marketing, and gaps between contracts). A common rule is to add 30 to 50% to a salaried equivalent to find a fair freelance rate. So if a job pays $70,000/year ($33.65/hour), a freelancer should charge at least $44 to 50/hour to break even.

Gross pay is your salary or wages before any deductions. Net pay (take home pay) is what you receive after income tax, Social Security, Medicare, state taxes, and any voluntary deductions (health insurance premiums, 401k contributions, etc.) are subtracted. This converter works with gross figures. Use the Take Home Pay Calculator to estimate your net hourly equivalent after taxes.

Track your total hours over a meaningful period (4 to 12 weeks) and average them. Divide your total compensation for that period by total hours worked. If you work 35 hours some weeks and 50 others, the simple 8 hours a day assumption overestimates your hourly rate. For salaried employees, this is especially relevant when evaluating whether overtime work is fairly compensated, your effective rate per hour falls as unpaid extra hours accumulate.

Context matters enormously. The US federal minimum wage is $7.25/hour, but living wage calculations from MIT put the living wage for a single adult at $17 to 25/hour in most US cities, depending on location and cost of living. The median hourly wage in the US is approximately $22 to 24/hour. For skilled professional roles (software engineering, finance, medicine, law), market rates typically range from $40 to 200+/hour gross. Always benchmark against salary surveys for your specific role, industry, and geography.

Daily rates (day rates) are common in consulting, film and media production, construction, and short term contract work. A day rate assumes a full working day, typically 8 hours, but sometimes 10 to 12 in fields like film. Weekly rates appear in freelance agreements and short term contracts. Both are simply the hourly rate multiplied by hours per day or hours per week respectively. When comparing day rates across industries, always clarify how many hours constitute a standard day.

This converter calculates your regular hourly equivalent only, it does not add overtime premiums. Under US federal law (FLSA), non exempt employees earn 1.5x their regular rate for hours over 40 per week. If you regularly work overtime, your effective annual compensation is higher than base salary alone. To calculate: add (overtime hours per year) x (1.5 x hourly rate) to your annual base before converting.