Gross to Hourly Rate Calculator
Your Estimated Hourly Rate:
How to Calculate Hourly Rate from Gross Pay: A Complete Guide
Understanding your hourly worth is essential for budgeting, negotiating raises, or comparing job offers. While most professionals focus on their annual salary, the hourly rate reveals the true value of your time based on the actual hours you work.
The Basic Formula
To calculate your hourly rate manually, you need two primary pieces of information: your total gross pay and the total number of hours worked during that same period. The formula is:
Step-by-Step Breakdown by Pay Frequency
1. Annual Salary to Hourly
If you earn a yearly salary, the standard calculation assumes a 52-week work year. If you work a standard 40-hour week, you are working 2,080 hours per year.
Example: For a $60,000 salary:
$60,000 / 52 weeks / 40 hours = $28.85 per hour.
2. Monthly Gross to Hourly
Months vary in length, but for calculation purposes, we use the average of 4.333 weeks per month.
Example: For $4,000 gross monthly pay at 35 hours per week:
$4,000 / (4.333 × 35) = $26.37 per hour.
3. Bi-Weekly to Hourly
Many employees are paid every two weeks. This is the simplest calculation after the weekly rate.
Example: For a $2,500 gross bi-weekly check at 40 hours per week:
$2,500 / (2 weeks × 40 hours) = $31.25 per hour.
Important Considerations
- Gross Pay vs. Net Pay: Always use Gross Pay (the amount before taxes and deductions) to find your official hourly rate.
- Unpaid Breaks: If you are at work for 9 hours but have a 1-hour unpaid lunch, use 8 hours in your calculation.
- Overtime: If you regularly work more than 40 hours, your effective hourly rate actually decreases unless you are paid time-and-a-half.
Frequently Asked Questions
Is 2,080 hours the standard for a work year?
Yes, 52 weeks multiplied by 40 hours equals 2,080. This is the figure most HR departments and mortgage lenders use for salary conversions.
Does this include bonuses?
If you want your "total compensation" hourly rate, include your annual bonus in the gross pay. If you want your "base" hourly rate, exclude bonuses and commissions.