How to convert salary to hourly rate

Converting an annual salary to an hourly rate sounds like a basic division problem. The trick is that the answer depends on what you’re trying to compare — a recruiter’s advertised salary, a contract hourly rate, your own freelance billing rate, or your take-home pay per working hour. Each uses a different divisor. This guide walks through all four, and gives you the back-of-envelope rule that usually works in 10 seconds.

The 10-second rule (rough)

Divide annual salary by 2,000 to get a rough hourly equivalent. $100,000/year ≈ $50/hour. $60,000/year ≈ $30/hour. Works because a typical full-time year is ~52 weeks × 40 hours = 2,080 hours; 2,000 is a cleaner number that also approximately nets out 2 weeks of unpaid vacation.

Use this for mental math: “Is $72k too low for my market?” → $72k / 2,000 = $36/hour — compare to what you know your hourly rate should be.

Four different hourly equivalents

(1) Nominal hourly = Salary / 2,080. This is what HR uses on pay calcs. $75,000 / 2,080 = $36.06/hour.

(2) Working hourly (vacation-adjusted) = Salary / 2,000 (or 1,960 if you take a 3-week vacation). Better for comparing to contract rates where you don’t get paid for your vacation weeks. $75,000 / 2,000 = $37.50/hour.

(3) Fully-loaded employer hourly = Salary + benefits (health insurance, 401k match, payroll taxes, PTO) / 2,080. For most W-2 jobs, benefits add 25–40% — fully-loaded hourly is typically $75,000 × 1.35 / 2,080 = $48.68/hour. This is the number freelancers should quote against when replacing W-2 work.

(4) Net take-home hourly = (Salary − taxes − benefits you pay for) / actual hours worked. This is what you actually clear per hour spent. For a $75k job in California with 401(k) and health premium: about $55,000 net / 2,080 = $26.44/hour of lived time, or even less if you count unpaid overtime.

The freelance / contract math — very different

If you’re going from W-2 employment to freelancing, the hourly rate you need to charge is much higher than the nominal hourly of your old salary. You now cover:

Self-employment tax (15.3%) where the employer used to cover half.

Your own health insurance, often $8–20k/year for a family plan.

Your own retirement contributions (no match from employer).

Vacation, sick time, and holidays are all unpaid.

Unbillable time — admin, sales, invoicing, follow-up, proposals. 15–40% of a freelancer’s working hours are non-billable.

The rule of thumb: freelance hourly = W-2 hourly × 1.5 to 2.0x to net the same annual take-home with equivalent benefits. If you were earning $50/hour on W-2, charge $75–100/hour as a contractor.

The 50-week / 2,000-hour convention — why it’s used

The US salary-to-hourly convention uses 2,080 hours (52 × 40). The 2,000-hour convention (50 weeks × 40 hours) accounts for 2 weeks of vacation and produces cleaner hourly numbers. Europe usually uses 1,920 hours (48 × 40) or less, reflecting more vacation. Australia uses 1,976 (52 × 38). Check which standard your counterparty uses before quoting.

Going the other direction — hourly to salary

Annual salary = Hourly × 2,080 (full-time) or × (hours/week × 52) for anything less.

$40/hour × 2,080 = $83,200/year nominal. Part-time at 25 hours/week: $40 × 25 × 52 = $52,000/year.

The “is this offer fair?” sanity check

When evaluating an offer or a freelance project, convert to hourly and ask “would I accept this as an hourly rate?” A $60,000/year salary offer for a job with regular 55-hour weeks works out to $20.98/hour — possibly below your local market rate for the same skill set. The salary number can disguise below-market compensation; the hourly rate reveals it.

Overtime and exempt status complications

Under US law (FLSA), hourly workers earn time-and-a-half above 40 hours/week; salaried-exempt workers don’t. If you’re salaried at $75k and working 55-hour weeks, your effective hourly is 75,000 / (55 × 52) = $26.22/hour — versus $36/hour on 40-hour weeks. The overtime ceiling threshold was $35,568/year federal as of 2019, proposed to rise; state rules vary (California: ~$66,000/year for most exempt roles).

Break-even math for taking a contract

If you’re leaving a $100k W-2 job to contract, your contract rate needs to cover: (1) the salary, (2) ~35% in benefits you’ll replace, (3) 10–20% unbillable time, (4) self-employment tax half. Rough break-even: $100k × 1.5 / (2,000 × 0.80 billable) = ~$94/hour to net out equivalent. If the contract is $75/hour, you’re taking a pay cut.

Run the numbers

Use the hourly rate calculator for the four conversions described above. Pair with the paycheck calculator if you want the net take-home at a specific salary, and the freelance rate calculator for the “what should I charge?” side of contract work — including benefits, unbillable time, and tax overhead.