The standard conversion is one line: divide your salary by 2,080 to get an hourly rate, or multiply your hourly rate by 2,080 to get a salary. Every calculator on the internet does this, and for a rough comparison it is fine.
It is also wrong in three specific ways that matter whenever real money is at stake. The 2,080 figure is a convention rather than a fact, and it does not match the actual number of working hours in most years. It ignores paid time off, which is the single largest difference between salaried and hourly employment. And it says nothing about the employer-paid benefits that can add a fifth or more to the value of a job.
This guide covers the quick conversion, the corrections that make it accurate, how to price contract work against a salary, and the genuinely strange arithmetic that applies when a salaried employee is owed overtime.
The quick version
- Salary to hourly: annual salary divided by 2,080
- Hourly to salary: hourly rate multiplied by 2,080
- Hourly to weekly: hourly rate multiplied by your scheduled hours
- Salary to weekly: annual salary divided by 52
The 2,080 comes from 40 hours a week times 52 weeks. A few common reference points:
| Annual salary | Hourly at 2,080 | Weekly |
|---|---|---|
| $40,000 | $19.23 | $769.23 |
| $52,000 | $25.00 | $1,000.00 |
| $60,000 | $28.85 | $1,153.85 |
| $72,000 | $34.62 | $1,384.62 |
| $85,000 | $40.87 | $1,634.62 |
| $100,000 | $48.08 | $1,923.08 |
A useful shortcut for mental arithmetic: halve your hourly rate and add three zeros, and you are close to the annual salary. $25 an hour becomes roughly $50,000. It works because 2,080 is close to 2,000.
Correction one: 2,080 is not a real number of hours
There is no law establishing 2,080 hours. It is a convention that assumes exactly 52 weeks, and a year contains 52 weeks plus one day, or two in a leap year.
Counted properly, 2026 contains 261 weekdays, which at 8 hours each is 2,088 hours. Some years contain 260 weekdays and some 262. The variance is small, roughly one part in 260, but it is the same mechanism that produces a 27th biweekly paycheck in certain years, which is a much more visible effect. That is covered in biweekly versus semimonthly.
For most purposes 2,080 is close enough. It matters when you are converting a salary into a contract rate, where a two percent error compounds across a year, and it matters for employers budgeting headcount.
Correction two: paid time off changes everything
This is the correction that actually moves the number, and almost every online calculator skips it.
A salaried employee is paid for 2,080 hours but does not work 2,080 hours. Holidays and vacation are paid time during which no work happens. An hourly employee with no paid leave is paid only for hours actually worked. Comparing the two on the same denominator compares different things.
Take a $72,000 salary with 10 paid holidays and 15 days of paid vacation. That is 25 days, or 200 hours, of paid non-working time.
- Hours actually worked: 2,088 minus 200 equals 1,888
- Effective rate per hour worked: $72,000 divided by 1,888 equals $38.14
- The conventional figure: $34.62
The gap is $3.52 an hour, or roughly 10 percent. An hourly job with no paid leave would need to pay $38.14 to match that salary, not $34.62. Anyone weighing a salaried offer against an hourly one, or considering a move in either direction, is comparing the wrong numbers without this adjustment.
The same correction runs in reverse. An hourly worker at $25 who takes 25 days off unpaid works 1,888 hours and earns $47,200, not the $52,000 that the 2,080 conversion suggests.
Correction three: the benefits are part of the pay
Employer contributions do not appear in either number and are frequently worth more than the difference people are negotiating over.
On a $72,000 salary, an employer typically pays:
- The employer half of Social Security and Medicare, at 7.65 percent, which is about $5,500
- The employer share of health coverage, often several thousand dollars and frequently larger than the employee’s own share
- A retirement match, commonly 3 to 6 percent, so $2,200 to $4,300
- Unemployment insurance, workers compensation, and any disability or life coverage
Add these and the true cost of employing that person is often 25 to 40 percent above the salary. Most of that value reaches you, even though none of it appears on the salary line. Your pay stub may show some of it in an employer contribution section, which is explained in how to read your pay stub.
This is why an hourly role paying a nominally higher rate with no benefits can be worse compensation than a salaried role paying less.
Pricing contract work against a salary
This is where the naive conversion causes real financial damage. Someone leaving a $72,000 job to freelance at “about $35 an hour” has taken a very large pay cut without realizing it.
Build the rate up from what you are actually replacing:
- Start with the salary: $72,000
- Add self-employment tax. As an employee you paid 7.65 percent and your employer paid the other half. Self-employed, you pay all 15.3 percent. Replacing the employer half costs roughly $5,500. See self-employment tax.
- Add health coverage you now buy yourself, commonly $6,000 to $10,000 for an individual.
- Add the retirement contribution your employer was making, say $2,200.
- Subtotal: roughly $86,000 to stand still.
- Divide by billable hours, not working hours. This is the step people miss. Contractors spend unpaid time on finding work, invoicing, admin, and gaps between engagements. A realistic billable figure is 1,400 to 1,600 hours a year, not 1,888.
At 1,500 billable hours, $86,000 divided by 1,500 is roughly $57 an hour simply to match a $72,000 salaried job. That is about 1.65 times the naive $34.62 conversion, which is why experienced contractors talk about multiplying an employee rate by 1.5 to 2 rather than converting it directly.
Nothing in that figure accounts for the risk you have taken on, the absence of paid sick leave, or the fact that nobody is withholding your taxes for you. Contractors generally need to make quarterly estimated payments, covered in estimated taxes 2026.
When a salaried employee is owed overtime
Salaried does not mean exempt from overtime. If you fail any of the three exemption tests, you are non-exempt and owed overtime even though you are paid a salary, a point covered fully in exempt versus non-exempt.
Converting a salary into an overtime rate is not as simple as dividing by 2,080, because the answer depends on how many hours the salary was intended to cover.
The standard method
Where a salary is understood to compensate a fixed 40 hour week, divide the weekly salary by 40 to get the regular rate, then pay 1.5 times that for hours beyond 40. On $72,000, the weekly salary is $1,384.62, the regular rate is $34.62, and overtime is $51.93 an hour.
The fluctuating workweek method
There is a second method, set out in federal regulation, that produces a very different and much lower result. It applies where five conditions are met: the employee’s hours genuinely fluctuate week to week, the salary is fixed and does not vary with hours worked, the salary is high enough to cover at least minimum wage in the longest weeks, there is a clear mutual understanding that the fixed salary covers whatever hours are worked, and overtime is paid on top.
Where that applies, the regular rate is recalculated every week by dividing the salary by the hours actually worked that week. Because the fixed salary has already paid for all hours at straight time, only an additional half the regular rate is owed for overtime hours rather than one and a half.
Take a $1,000 weekly salary:
- A 40 hour week: regular rate $25.00, no overtime, total $1,000
- A 50 hour week: regular rate $20.00, plus 10 hours at half that rate, so $100 extra, total $1,100
- A 60 hour week: regular rate $16.67, plus 20 hours at half, so $166.70 extra, total $1,166.70
Notice what happens. The more overtime you work, the lower your effective hourly rate becomes. Under the standard method, a 50 hour week on a $1,000 salary would produce $1,375. The difference is substantial and entirely legal where the conditions are met.
Two things worth knowing. The mutual understanding requirement is real, so an employer cannot apply this retroactively to a worker who was told nothing. And since a 2020 rule change, employers may pay bonuses, commissions, and premium payments alongside a fluctuating workweek salary, which was previously disputed. Those additional payments must be folded into the regular rate calculation, on the same principle described in overtime pay rules.
Comparing two offers properly
Put both roles on the same footing before deciding:
- Convert both to an annual figure using 2,080 as a starting point.
- Adjust for paid time off, so that you are comparing pay per hour actually worked.
- Add the employer’s benefit contributions to each, particularly health coverage and any retirement match.
- Account for realistic hours. A salaried role expecting 50 hour weeks pays materially less per hour than its headline suggests, and no overtime is owed if the role is genuinely exempt.
- Compare after tax, not before, especially if the roles are in different states. Our United States salary calculator will do this, and same salary, different state shows how large the state effect can be.
One asymmetry is worth naming. Hourly work converts overtime into money. Salaried exempt work converts it into nothing. If the salaried role reliably runs to 50 hours, its true hourly rate is 20 percent below the number you calculated, and that gap does not appear anywhere in the offer letter.
Frequently asked questions
How do I convert my salary to an hourly rate?
Divide your annual salary by 2,080, which is 40 hours a week across 52 weeks. A $72,000 salary works out to $34.62 an hour. For a more accurate figure, subtract your paid holidays and vacation from the hours first, since a salaried employee is paid for 2,080 hours but works fewer. With 25 days of paid leave, that same salary is worth about $38.14 per hour actually worked.
Is 2,080 hours accurate?
It is a convention rather than a legal standard. It assumes exactly 52 weeks, but a year contains 52 weeks plus a day, or two in a leap year. Counted by weekdays, 2026 contains 261 working days, or 2,088 hours at 8 hours a day. Other years contain 260 or 262. The difference is small for most purposes but matters when converting a salary into a contract rate.
What hourly rate should I charge as a contractor to match my salary?
Considerably more than the simple conversion suggests. You need to replace the employer half of Social Security and Medicare at about 7.65 percent, your health coverage, and any retirement match, then divide by billable hours rather than working hours, since contracting involves unpaid admin, invoicing, and gaps between engagements. Matching a $72,000 salary typically requires around $55 to $60 an hour at 1,500 billable hours, which is roughly 1.5 to 2 times the naive conversion.
How is overtime calculated for a salaried employee?
Usually by dividing the weekly salary by 40 to find the regular rate, then paying 1.5 times that rate for hours beyond 40. However, where the fluctuating workweek method applies, the regular rate is recalculated each week by dividing the salary by the hours actually worked, and only an additional half of that rate is owed for overtime, because the fixed salary already covered all hours at straight time. That method requires a clear mutual understanding and genuinely fluctuating hours.
Is it better to be paid hourly or salaried?
It depends on your hours. Hourly work converts extra hours into money, while exempt salaried work does not, so a salaried role that reliably runs to 50 hours a week pays about 20 percent less per hour than its headline figure suggests. Salaried roles more often carry paid time off, health coverage, and retirement matching, which can be worth 25 to 40 percent on top of the salary. Compare pay per hour actually worked, with benefits included, rather than the headline numbers.
Benefit values and billable hour assumptions vary widely by industry and location. The figures here are illustrative. This is general information rather than tax or legal advice.
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