Converting Hourly Rate to Annual Income
Full-time hourly work = 40 hours/week × 52 weeks = 2,080 annual hours. Your annual gross income = hourly rate × 2,080. This is the baseline for estimating your annual take-home. For variable hours, use your typical weekly average × 52 to estimate your annual income for tax planning purposes.
Hourly rate to approximate annual take-home pay conversion (single, federal only)
| Hourly Rate | Annual (2,080 hrs) | Monthly (Avg.) | Approx. Annual Take-Home (No State) |
|---|---|---|---|
| $15/hour | $31,200 | $2,600 | ~$25,700 |
| $18/hour | $37,440 | $3,120 | ~$30,580 |
| $22/hour | $45,760 | $3,813 | ~$37,250 |
| $25/hour | $52,000 | $4,333 | ~$42,290 |
| $30/hour | $62,400 | $5,200 | ~$50,690 |
| $40/hour | $83,200 | $6,933 | ~$64,620 |
Why Hourly Workers' Withholding Varies by Paycheck
Federal withholding is calculated by annualizing your per-paycheck gross (multiplying by pay periods). A week where you work 50 hours (40 regular + 10 overtime) has a higher gross than a 35-hour week. The annualized income for a 50-hour week is much higher than for a 35-hour week — triggering higher withholding per paycheck. This is not a 'penalty' — it is the system trying to estimate your annual income accurately.
Hourly workers should budget based on their minimum guaranteed or typical hours, not their maximum possible. Create a budget on the lower income and treat overtime as a bonus. This prevents overspending based on occasional high-hour weeks and provides a financial buffer for slow periods.
Overtime Calculation for Hourly Workers
- Federal law requires overtime (1.5× hourly rate) for non-exempt employees working over 40 hours/week
- State laws may require overtime for over 8 hours/day or other thresholds
- Overtime pay is taxed as ordinary income — same rate as regular pay, not a higher rate
- Example: $20/hour regular; overtime $30/hour. Week with 48 hours: (40 × $20) + (8 × $30) = $800 + $240 = $1,040 gross
- Take-home: $1,040 - federal withholding (approximately 20%) - FICA (7.65%) - state = approximately $750-$780 net for most workers
Calculate Your Hourly Take-Home Pay
Enter your hourly rate and expected weekly hours to see your weekly, biweekly, and annual net take-home pay.