The 2,080-hour year
Converting an hourly wage to an annual salary rests on one number: the hours you are paid for in a year. The US default is 40 hours a week for 52 weeks, which is 2,080 hours. Multiply the hourly rate by 2,080 and you have the annual figure. At $25.00 an hour that is $52,000 a year, $1,000 a week, $200 a day on an eight-hour schedule, $2,000 every two weeks, $2,166.67 twice a month and $4,333.33 a month. Going the other way, divide an annual salary by 2,080 to see the hourly rate it implies: a $75,000 salary is $36.06 an hour, and $100,000 is $48.08.
The monthly figure is always the annual salary divided by 12, never the weekly amount times four. Four weeks is only 28 days, so multiplying by four understates a month by about 8%. Similarly, biweekly pay uses 26 checks a year rather than two weekly checks in every month, which is why two months each year contain three biweekly paydays.
Adjusting for your real schedule
Change the hours per week if you work a 37.5-hour week with an unpaid lunch, a 35-hour office schedule or four ten-hour days. A 37.5-hour week is 1,950 paid hours a year, so the same $25.00 rate produces $48,750 rather than $52,000. Change the paid weeks per year if some of your time off is unpaid. Salaried employees are paid for all 52 weeks including their vacation, but an hourly worker who takes two unpaid weeks is really earning 50 weeks of pay: $25.00 an hour becomes $50,000, not $52,000. School-year employees, seasonal workers and contractors often need a much lower figure, and a contractor billing 1,800 hours at $60 an hour grosses $108,000.
The days-per-week setting only affects the daily figure, which is the hourly rate times the hours in one day. On a four-day, ten-hour schedule, $25.00 an hour is $250 a day but still $1,000 a week.
Comparing an hourly job with a salaried offer
The gross numbers are only the start of a fair comparison. Hourly non-exempt work pays time and a half beyond 40 hours in a week, so overtime can add substantially, while an exempt salaried role pays the same for 45 or 55 hours. Count paid time off, employer health premiums, the 401(k) match, bonuses and any unpaid gaps in an hourly schedule. Self-employed contractors also owe the full 15.3% self-employment tax instead of the employee half, which is why contract rates are usually set well above the equivalent employee wage.
Finally, remember that everything on this page is gross pay. Federal income tax, Social Security and Medicare, state tax where it applies, health premiums and retirement deferrals all come out before the deposit lands. A rough rule of thumb is that 70% to 80% of gross reaches the bank for a typical middle-income worker; the paycheck calculator gives a much closer figure for your own situation.