How to turn an hourly rate into an annual income, add overtime the right way, and see what it means for your paycheck and your budget.
To convert an hourly rate to an annual salary, multiply the rate by the hours you work in a week and by 52 weeks. For a standard full-time job of 40 hours, that is 2,080 hours a year, so a rate of $22 an hour is $45,760 a year. Overtime changes the result, because extra hours are usually paid at a higher rate. The rest of this guide shows how to add it in, with the numbers worked out, and links to the calculators that do the arithmetic for you.
These figures assume 40 hours a week for 52 weeks, which is 2,080 hours, with no overtime:
To go the other way, divide a salary by 2,080. A $60,000 salary is about $28.85 an hour. The salary calculator converts in both directions and lets you change the hours per week.
In the United States, federal law generally requires overtime pay of at least one and a half times the regular rate for hours over 40 in a workweek, for employees who are covered by the rule. Take a worker paid $22 an hour who works 40 regular hours and 5 overtime hours each week:
That is $2,090 gross every two weeks, or about $4,528 a month. It is $8,580 a year more than the $45,760 the same person would earn with no overtime. Your average hourly rate also rises, because 45 hours pay $1,045, or $23.22 an hour. The paycheck and overtime calculator does exactly this, including double-time hours and any pay frequency.
Using the same $22 rate and 40 regular hours, here is how weekly overtime changes annual gross pay:
Each overtime hour is worth $33 here, but the effective rate rises only slowly, because most of your hours are still paid at $22. At 10 hours of overtime you work 50 hours a week to earn $1,210, which averages $24.20 an hour. Overtime pays more per hour than regular time, but it also costs you time, and that is worth weighing.
Say you earn $22 an hour and want to reach $60,000 a year. Base pay is $45,760, so you need another $14,240 a year, or $273.85 a week. At $33 for each overtime hour, that takes about 8.3 hours of overtime every week, all year. To work out your own target, subtract your base annual pay from your goal, divide by 52, then divide by your overtime rate.
The 2,080-hour figure assumes you are paid for all 52 weeks. If you take two weeks unpaid, the year has 50 paid weeks: at $25 an hour for 40 hours, that is $50,000 rather than $52,000. Part-time works the same way. At $20 an hour for 30 hours a week, the annual figure is $20 x 30 x 52 = $31,200. In the salary calculator, change the hours per week to match your schedule.
The reverse question matters for salaried workers who put in long weeks. A $60,000 salary is $28.85 an hour at 40 hours a week. If you regularly work 45 hours, the true rate falls to $25.64, and at 50 hours it is $23.08. Salaried, non-exempt employees are usually owed overtime for those extra hours, but exempt employees are not, so the effective rate is a useful way to compare jobs.
All the figures above are before tax. Overtime is not taxed at a special higher rate, but a bigger paycheck can be withheld at a higher percentage, and payroll taxes apply as well. As an illustration, if 23% of the $54,340 example were withheld for income tax and other deductions, you would take home $41,841.80 a year. That is about $3,486.82 a month, or $1,609.30 from each $2,090 biweekly check. Enter your own tax and deduction percentages in the salary and take-home pay calculator, since your rates will differ. Take-home pay is the number to use with the budget calculator.
Accurate overtime starts with an accurate count of hours. The time calculator finds the hours between clock-in and clock-out, subtracts unpaid breaks, converts minutes to decimal hours, and adds up a whole week of shifts. For example, shifts of 8h 30m, 7h 45m, 8h, 8h 15m and 6h 30m add up to 39 hours. If a week reaches 46 hours at $18.50 an hour, the first 40 hours pay $740.00 and the 6 overtime hours at $27.75 pay $166.50, for a total of $906.50.
How do I convert an hourly wage to an annual salary?
Multiply your hourly rate by the hours you work each week, then by 52. For a full-time job of 40 hours, multiply the rate by 2,080. For example, $22 an hour is $45,760 a year.
How do I calculate overtime pay?
Multiply your regular hourly rate by 1.5 to get the overtime rate, then multiply that by your overtime hours. At $22 an hour, the overtime rate is $33, so 5 overtime hours pay $165. Add that to your regular pay for the week.
Is overtime always time and a half?
Under federal law, time and a half is the minimum for covered employees working over 40 hours in a week. Some states, contracts or employers pay more, and double time applies in some situations. Check your pay stub and your state's rules.
How many hours are in a work year?
A standard full-time year has 2,080 hours, which is 40 hours times 52 weeks. It is a convention that includes paid holidays and vacation. If you are unpaid for part of the year, use the number of paid weeks instead.
Is overtime taxed more than regular pay?
No, overtime is taxed as ordinary income at the same rates. It can look that way because a larger paycheck may be withheld at a higher percentage. The actual tax you owe depends on your total income for the year.
Should I include overtime when I plan my budget or apply for a loan?
For a budget, it is safer to build around base pay and treat overtime as extra. Lenders may count overtime if it is regular and documented, often over a period of a couple of years, but their rules differ, so ask the lender.
What is my effective hourly rate with overtime?
Divide your total pay for the week by your total hours. With $1,045 for 45 hours, the effective rate is $23.22, compared with a base rate of $22. The more overtime you work, the closer it moves toward the overtime rate.
How do I go from hourly pay to take-home pay?
First work out your gross pay for the period, including any overtime. Then subtract taxes and other deductions using your own percentages, which you can find on a recent pay stub. The salary calculator does this for you.