How to calculate your true hourly rate from your salary

The basic formula for hourly rate from salary

The standard back‑of‑the‑napkin formula assumes you work 40 hours per week and 52 weeks per year:

That’s fine for quick mental math, but it ignores reality: unpaid overtime, weeks you’re actually off, and weird schedules. If you want your true hourly rate, you need to use the hours and weeks you really work.

Step 1: Add up how many hours you actually work

Start with your contract hours, then adjust for what really happens:

• Contract says 40 hours/week but you regularly do 45–50?
• Do you commute off the clock but still mentally treat it as “work time”?
• Do you respond to messages at night or on weekends?

You don’t need a perfect number. A realistic average is enough – for example:

• Contract: 40 hours
• Average unpaid overtime: +5 hours
• Average total per week: 45 hours

Step 2: Decide how many weeks per year you really work

The textbook version uses 52 weeks, but most people aren’t working full‑time every single week:

• Paid vacation and holidays
• Unpaid breaks between jobs or contracts
• Sick days, family leave, or slow periods

If you want a slightly conservative estimate, you can use something like 48–50 weeks instead of 52. The fewer weeks you enter, the higher your hourly rate will be.

Step 3: Plug those numbers into the formula

Use the general form:

Example: $60,000 salary with long weeks

Let’s say you make $60,000, work about 45 hours per week, and are working 50 weeks per year:

On paper, $60k might “feel” like more, but once you factor in the extra hours, your true hourly rate is closer to $26–27/hour, not the $28.85/hour you’d get from the simple 40×52 formula.

Step 4: Compare two job offers using hourly rate

The real value of hourly rate is in comparing options. Imagine you have two offers:

• Offer A: $70,000, “fast‑paced culture”, 50‑hour weeks are common
• Offer B: $60,000, pretty strict 38‑hour weeks, rarely any overtime

Offer A calculation

Offer B calculation

On yearly salary alone, Offer A “wins”. On true hourly rate, Offer B actually pays more and likely gives you more free time and less burnout risk.

You can run your own numbers by dropping each offer into the Salary ↔ Hourly calculator and adjusting the hours/weeks.

What about tax, benefits, and bonuses?

The hourly rate you’re calculating here is deliberately simple: it’s based on gross (pre‑tax) pay only. That keeps the comparison clean. But when you’re choosing between jobs, don’t ignore:

• Health insurance, retirement contributions, and other benefits
• Regular bonuses, commissions, or on‑call pay
• Unpaid vs paid lunch breaks and overtime rules

For quick comparisons, you can treat benefits as a rough extra percentage added on top of salary (“this job’s benefits feel like ~10% extra”). Just be consistent between options.

Use the calculator instead of doing the math by hand

If you don’t feel like punching numbers into a calculator every time, use the Salary ↔ Hourly calculator:

1. Open the calculator page.
2. Choose whether you’re starting from salary → hourly or hourly → salary.
3. Enter your number (salary or hourly rate), plus hours/week and weeks/year.
4. Hit Calculate to see yearly, monthly, bi‑weekly, weekly, daily, and hourly breakdowns.
5. Change the hours/weeks to see how overtime or time off changes the picture.

It’s the same formula as above, just without you doing the division every time.

When a lower salary can still be a better deal

Once you think in hourly terms, it’s easier to spot when a “smaller” salary is actually better:

• A 4‑day‑week job at slightly lower pay might give you a higher hourly rate and an extra day of life back.
• A job with strong benefits and predictable hours can beat a higher‑paying but chaotic role.
• Remote or hybrid roles might save you several hours of commuting every week, which is effectively free time.

The point isn’t to obsess over the exact cent amount. It’s to get a clearer sense of what you’re really trading your time for.

Next step: run your own numbers

Take 3 minutes and plug your current job (and any offers you’re considering) into the calculator:

• Use your realistic average hours per week, including unpaid overtime.
• Use a weeks‑per‑year number that reflects time off.
• Look at the hourly number and ask: “Does this feel fair for what my life looks like?”

You might find you’re underpaid for the time and stress involved — or that a role you thought was “just okay” is actually a solid deal when you include boundaries and free time.

This page is just a guide. It’s not financial or tax advice. Talk to a qualified professional for detailed planning, especially if you’re making big money decisions.