Salary to hourly: how to convert your annual offer

The short answer

Bottom line up front: divide annual salary by the hours you actually work in a year. The U.S. baseline is 2,080 hours (52 weeks × 40 hours), so $50,000 ÷ 2,080 = $24.04/hr. Subtract paid time off and your effective rate rises — an $80,000 salary with 10 vacation days plus 10 holidays (160 hours off, 1,920 effective hours) works out to $41.67/hr instead of $38.46. Run your real PTO through the salary to hourly calculator.

Who this is for

• Job seekers comparing a salary offer against an hourly role.
• Contractors weighing a W-2 offer against a 1099 day rate.
• Anyone checking whether their current salary is competitive per hour.

How the conversion works

The math is a single division. The only thing that varies is the denominator — how many hours per year you treat as “worked.”

hourly_rate = annual_salary / work_hours_per_year
work_hours_per_year = (52 weeks − vacation_weeks − holiday_weeks) × hours_per_week

The Bureau of Labor Statistics uses 2,080 hours (52 × 40) as the full-time baseline. That number assumes you work every week of the year with no time off. The effective rate is what each actually-worked hour earns once vacation and holiday hours come out of the denominator.

Worked examples

Now factor PTO. An $80,000 salary with 10 vacation days and 10 paid holidays gives 20 days × 8 hours = 160 hours off, leaving 1,920 effective hours. The standard rate is $80,000 ÷ 2,080 = $38.46/hr; the effective rate is $80,000 ÷ 1,920 = $41.67/hr. That gap is real compensation — the paid time off is part of the offer.

What expected hours do to the rate

Most salaried roles are exempt from overtime, so every extra hour dilutes the hourly rate. Going from 40 to 50 hours per week is 25% more time, which lands as a 20% lower hourly rate at the same salary.

Other ways to slice the same salary

If you want monthly or per-paycheck instead of per-hour, the formula is just a different denominator:

• Monthly: annual salary ÷ 12
• Biweekly: annual salary ÷ 26
• Weekly: annual salary ÷ 52
• Daily: annual salary ÷ 260 workdays (52 weeks × 5 days)

W-2 vs 1099: contractor context

A 1099 hourly rate is not the same product as a W-2 hourly rate. Contractors absorb costs the employer would otherwise carry, so the gross rate has to be higher to leave comparable take-home.

A common planning range is 1.5× to 2.0× the W-2 equivalent hourly rate. That premium covers three buckets:

• Self-employment tax: contractors pay both halves of FICA (15.3%) vs. the W-2 employee half (7.65%).
• Benefits replacement: health insurance, retirement match, and equipment all come out of the contractor rate.
• No PTO: hours not billed are not paid. Two weeks off is roughly 3.8% of the year.

General guidance, not professional advice. The right number depends on market, skills, utilization, contract length, and risk tolerance. To model the tax side separately, use the self-employment tax calculator.

How to compare two offers

1. Start with gross annual salary before taxes.
2. Estimate the hours per week you actually expect to work, not the official schedule.
3. Subtract vacation and holiday hours to get effective hourly pay.
4. Compare benefits, flexibility, commute, and contractor risk separately — the hourly number cannot capture them.
5. Run your inputs through the salary to hourly calculator so the denominator matches your real schedule.

Frequently asked questions

Sources & methodology

• U.S. Bureau of Labor Statistics — full-time hours-at-work convention (2,080 hours per year baseline).
• FigureCal salary to hourly calculator — formula, PTO adjustment, worked examples.
• FigureCal self-employment tax calculator — contractor-side tax modeling.