How To Convert Salary To Hourly Rate
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The 10-second rule (rough)
Converting an annual salary to an hourly rate sounds like a basic division problem. The trick is that the answer depends on what you’re trying to compare — a recruiter’s advertised salary, a contract hourly rate, your own freelance billing rate, or your take-home pay per working hour. Each uses a different divisor. This guide walks through all four, and gives you the back-of-envelope rule that usually works in 10 seconds.
Four different hourly equivalents
Use this for mental math: “Is $72k too low for my market?” → $72k / 2,000 = $36/hour — compare to what you know your hourly rate should be.
The freelance / contract math — very different
The US salary-to-hourly convention uses 2,080 hours (52 × 40). The 2,000-hour convention (50 weeks × 40 hours) accounts for 2 weeks of vacation and produces cleaner hourly numbers. Europe usually uses 1,920 hours (48 × 40) or less, reflecting more vacation. Australia uses 1,976 (52 × 38). Check which standard your counterparty uses before quoting.
The 50-week / 2,000-hour convention — why it’s used
$40/hour × 2,080 = $83,200/year nominal. Part-time at 25 hours/week: $40 × 25 × 52 = $52,000/year.
Going the other direction — hourly to salary
When evaluating an offer or a freelance project, convert to hourly and ask “would I accept this as an hourly rate?” A $60,000/year salary offer for a job with regular 55-hour weeks works out to $20.98/hour — possibly below your local market rate for the same skill set. The salary number can disguise below-market compensation; the hourly rate reveals it.
The “is this offer fair?” sanity check
Under US law (FLSA), hourly workers earn time-and-a-half above 40 hours/week; salaried-exempt workers don’t. If you’re salaried at $75k and working 55-hour weeks, your effective hourly is 75,000 / (55 × 52) = $26.22/hour — versus $36/hour on 40-hour weeks. The overtime ceiling threshold was $35,568/year federal as of 2019, proposed to rise; state rules vary (California: ~$66,000/year for most exempt roles).
Overtime and exempt status complications
If you’re leaving a $100k W-2 job to contract, your contract rate needs to cover: (1) the salary, (2) ~35% in benefits you’ll replace, (3) 10–20% unbillable time, (4) self-employment tax half. Rough break-even: $100k × 1.5 / (2,000 × 0.80 billable) = ~$94/hour to net out equivalent. If the contract is $75/hour, you’re taking a pay cut.