Salary to Hourly Rate Converter
Convert any annual salary to its true hourly equivalent. Compare employee compensation with freelance rates.
What Is a Salary-to-Hourly Conversion?
A salary-to-hourly conversion tells you what each working hour is actually worth after factoring in paid time off, public holidays, benefits, and taxes. The simple formula (salary / 2,080 hours) under- counts your true rate because it ignores weeks you do not work.
Why Freelancers Need This Calculator
When switching from full-time employment to freelancing, most people undercharge because they compare their freelance rate directly to their old hourly rate. As a freelancer you must cover self-employment tax, health insurance, retirement contributions, and unbillable hours. The "Freelance Equivalent" figure above shows what you need to charge per hour to match your salaried take-home pay. For the full formula and worked example, read our guide on how to calculate your freelance hourly rate.
Salary to Hourly Reference Table
| Annual Salary | Simple Hourly | Effective Hourly | Freelance Equiv. |
|---|---|---|---|
| $40,000 | $19.23 | $21.28 | $27.29 |
| $60,000 | $28.85 | $31.91 | $40.94 |
| $80,000 | $38.46 | $42.55 | $54.59 |
| $100,000 | $48.08 | $53.19 | $68.24 |
| $120,000 | $57.69 | $63.83 | $81.89 |
Based on 15 PTO days, 10 holidays, $6k benefits, 22% tax, 40h/week.
Employee vs Freelancer: The Hidden Costs
- Health, dental, and vision insurance (avg. $6,000-$12,000/year)
- Self-employment tax (extra 7.65% FICA on top of income tax)
- Retirement matching (up to 6% employer 401k match lost)
- Unbillable hours for admin, marketing, and business development
- No paid time off, sick days, or parental leave
Frequently Asked Questions
Divide the annual salary by the number of working hours in a year. A rough estimate uses 2,080 hours (40h x 52 weeks). For a more accurate figure, subtract PTO and public holidays first, then divide.
It is the hourly rate a freelancer must charge to match the take-home value of a salaried position. It accounts for the fact that freelancers pay higher taxes and receive no employer-paid benefits.
Because 2,080 assumes you work every weekday of the year. When you subtract PTO and holidays, you work fewer hours, so each hour is worth more. Adding employer-paid benefits increases your total compensation further.
For U.S. employees, 22% is a common effective federal rate for middle incomes. Self-employed workers should use 30% or higher to account for both income tax and the 15.3% self-employment tax. Adjust to match your actual tax bracket.
The default rates are rough federal estimates. If you live in a state with income tax, increase the tax rate accordingly. For example, California residents might use 28-32% for employees and 38-42% for self-employed.
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