Salary to Hourly Rate Calculator
Converts an annual salary into a true hourly wage by accounting for actual working days after removing vacation and holidays. Use it when comparing job offers, negotiating contracts, or pricing freelance work.
About this calculator
A raw salary-to-hourly conversion (annual salary ÷ 2,080) overstates your effective hourly rate because it ignores paid time off you don't actually work. The accurate formula is: Hourly Rate = Annual Salary / ((52 × Working Days Per Week − Vacation Days − Holidays) × Hours Per Day). First, calculate gross annual working days by multiplying 52 weeks by your working days per week. Then subtract vacation days and public holidays to get actual days worked. Multiply by hours per day to get total annual working hours. Dividing the salary by that figure gives your real hourly rate. For example, if you take 10 vacation days and 10 holidays, a standard full-time worker has roughly 1,960 working hours instead of 2,080 — a difference that meaningfully changes the hourly figure.
How to use
Suppose you earn $75,000 annually, work 5 days per week, 8 hours per day, with 15 vacation days and 10 holidays. Step 1 — gross working days: 52 × 5 = 260 days. Step 2 — subtract time off: 260 − 15 − 10 = 235 actual working days. Step 3 — total hours: 235 × 8 = 1,880 hours. Step 4 — hourly rate: $75,000 / 1,880 = $39.89/hour. Compare this to the naive 2,080-hour calculation ($75,000 / 2,080 = $36.06/hour) — your effective rate is actually $3.83 higher per hour. This matters when benchmarking against hourly contractors who must fund their own PTO.
Frequently asked questions
Why does vacation time affect the hourly equivalent of an annual salary?
Annual salary is paid for a set number of work days per year, including time you are paid but not actively working, like vacation and holidays. When you remove those non-working days from the denominator, you're spreading the same salary across fewer actual hours, which raises the effective hourly rate. This distinction matters when comparing salaried roles to hourly or contract positions, where the worker is only paid for hours actually worked and must fund their own time off. Understanding this difference prevents you from undervaluing a salaried position that includes generous PTO.
How do I convert a salary to an hourly rate for freelance or contract pricing?
When transitioning from salaried to freelance work, you need to set a rate that not only matches your salary but also covers benefits you'll lose, including health insurance, employer payroll taxes, and paid time off. Start by calculating your effective salaried hourly rate using this calculator, then add a benefits loading factor — commonly 25–40% — to compensate for those costs. For example, if your salaried equivalent is $40/hour, a freelance rate of $50–$56/hour would roughly preserve your take-home income. You should also factor in non-billable hours spent on business development, admin, and downtime between contracts.
What is the standard number of working hours in a year for salary calculations?
The most commonly used figure is 2,080 hours, derived from 52 weeks × 40 hours per week, and it assumes no vacation or holidays are taken. In practice, most full-time U.S. workers have 10 federal holidays and 10–15 vacation days, reducing actual working hours to roughly 1,880–1,960 per year. Countries with more generous leave policies — such as those in Western Europe — may see effective annual hours closer to 1,600–1,700. Using 2,080 as the divisor without adjustment leads to an understated hourly rate, which is why this calculator's formula produces a more realistic result.