Salary vs Hourly Calculator
Annualize a salary offer against an hourly rate honestly — including the overtime hours a salary quietly absorbs.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This calculator annualizes an hourly rate against a salary offer honestly — including the overtime asymmetry that headline numbers hide. An hourly job earns 1.5× for every hour past 40, while an exempt salary absorbs those hours for free, so the winner depends on how many hours the week really runs. The tool shows both annual totals, the effective hourly rate of each, and the crossover point where they equalize.
The formulas
- Hourly job, annualized
- (hourly rate × 40 × 52) + (1.5 × hourly rate × hours over 40 × 52)
- Salary job, annualized
- salary — plus, only if non-exempt, 1.5 × (salary ÷ 2,080) × hours over 40 × 52An exempt salary earns nothing for extra hours; 2,080 = 40 hours × 52 weeks.
- Effective hourly rate (each offer)
- annual pay ÷ (expected hours per week × 52)
- Crossover hours per week
- the weekly hours at which the two annual totals are equalBelow the crossover the salary wins; above it, hourly overtime pulls ahead.
Worked example
- Say the choice is $25/hour at an expected 45 hours per week versus a $58,000 exempt salary.
- Hourly job = $25 × 2,080 + 1.5 × $25 × 5 overtime hours × 52 weeks = $52,000 + $9,750 = $61,750 per year.
- Exempt salary = $58,000 flat — the 5 extra weekly hours add nothing.
- Effective rates across the 45-hour weeks (2,340 hours/year): hourly $26.39/hour vs salary $24.79/hour.
- The offers equalize at about 43.1 hours per week — under that, the salary pays more; at 45 hours the hourly job wins by $3,750 a year.
Rates, benchmarks & sources
- The 1.5× overtime multiplier over 40 hours for non-exempt work; exempt status requires the salary and duties tests — FLSA (29 U.S.C. §207) / 29 CFR 541
- 2,080 hours = 40 hours × 52 weeks, the standard full-time annualization used to convert a salary to an hourly equivalent — Convention
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- Pre-tax pay only — no taxes, and no valuation of benefits. A salary that comes with employer health coverage and a retirement match can beat a higher hourly total once benefits are priced in.
- Treats the exempt classification as given; whether a salaried role is genuinely exempt depends on the FLSA salary and duties tests (see the Overtime Pay calculator), and a misclassified "exempt" salary is actually owed overtime.
- Assumes the same expected hours every week of the year — seasonal spikes, unpaid time off, and weeks under 40 hours (which cut hourly pay but not salary) are not modeled.
- Ignores schedule risk: hourly workers may get fewer hours than expected in slow periods, while a salary is fixed — a stability difference the annual totals do not capture.
- State daily-overtime rules (such as California’s over-8-hours standard) are not modeled; the 1.5× premium applies to weekly hours over 40 only.
Frequently asked questions
How do I convert a salary to an hourly rate?
The standard conversion divides by 2,080 hours (40 hours × 52 weeks): $58,000 ÷ 2,080 = $27.88/hour. But that is the nominal rate — your effective rate divides by the hours you actually work. At 45 hours a week (2,340 hours a year), the same exempt salary is really $24.79/hour. The two diverge fast past 40 hours, which is exactly the gap this calculator exposes.
Why does the hourly job win at 45 hours even though the salary looks bigger?
Overtime asymmetry. The hourly job pays 1.5 × $25 = $37.50 for each of the 5 weekly hours past 40 — $9,750 a year — lifting it to $61,750, while the exempt salary stays at $58,000 no matter how long the weeks run. At the defaults the crossover sits near 43.1 hours per week: under that the salary pays more, over it the hourly offer pulls ahead.
Does a salaried job ever earn overtime?
Yes — salaried and exempt are not the same thing. A salary below the FLSA threshold ($684/week, currently litigation-dependent), or one attached to duties that fail the 29 CFR 541 tests, is non-exempt and earns 1.5× for hours over 40, computed on the salary’s hourly equivalent. This tool models that with the exempt toggle: uncheck it and the salary column earns overtime at salary ÷ 2,080 × 1.5.
Should benefits change how I read this comparison?
Substantially — this tool compares gross pay only. Employer health coverage averaged $9,325 for single plans in the KFF 2025 Employer Health Benefits Survey, mostly employer-paid, and a retirement match adds more; an hourly role without benefits must out-earn a salaried offer by thousands to break even in total compensation. Treat the annual totals here as the starting point, then add each offer’s benefits.
What if my hours vary week to week?
Run the tool at a realistic average, then at your busy-season hours, and compare against the crossover point. Because overtime pays 1.5×, occasional heavy weeks help the hourly offer more than occasional light weeks hurt it relative to a flat salary — but light weeks under 40 hours cut hourly pay directly while the salary holds. If your hours regularly land near the crossover, stability and benefits should decide it rather than the raw totals.
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