How to Calculate Hourly Rate From Salary: 2026
Divide your annual salary by the hours you work in a year: the standard is 2,080 hours (40 × 52), so $65,000 ÷ 2,080 = $31.25 an hour. Subtract paid holidays and PTO, or add unpaid overtime, to find your true rate per hour actually worked.
Your hourly rate from salary is annual salary divided by the hours you work in a year. The standard divisor is 2,080 hours (40 hours × 52 weeks), but your true hourly rate depends on how many of those hours you actually work — paid holidays, PTO and unpaid overtime all move the number.
The base formula
Example: a $65,000 salary ÷ 2,080 hours = $31.25 per hour. This is the figure employers and job boards quote, and it is the right number for comparing offers on equal terms.
Adjusting for paid holidays and PTO
A salary pays you for holidays and vacation, so you earn the same money over fewer worked hours. With the 11 federal holidays (88 hours) and 15 PTO days (120 hours), a full-time year drops to 1,872 hours actually worked. The same $65,000 salary is then worth $34.72 per hour worked — about 11% more than the headline rate.
The hidden cost of unpaid overtime
Exempt salaried employees are not paid for extra hours under the FLSA. If you regularly work 45 hours a week, your year is 2,340 hours and a $65,000 salary falls to $27.78 per hour. That is the number to use when deciding whether a salaried role really pays more than an hourly job with 1.5× overtime.
| Annual salary | Standard (2,080 h) | After holidays + PTO (1,872 h) | 45 h/week, no OT pay (2,340 h) |
|---|---|---|---|
| $45,000 | $21.63 | $24.04 | $19.23 |
| $65,000 | $31.25 | $34.72 | $27.78 |
| $85,000 | $40.87 | $45.41 | $36.32 |
| $105,000 | $50.48 | $56.09 | $44.87 |
| $130,000 | $62.50 | $69.44 | $55.56 |
Which hourly rate should you use?
- Comparing job offers or quoting a market rate: use 2,080 hours.
- Measuring what your time is really worth: use hours actually worked (subtract holidays and PTO, add unpaid overtime).
- Pricing freelance or contract work: start from the hours-worked rate and add 25–40% for self-employment tax, benefits and unpaid admin time.
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Open the calculatorFrequently asked questions
What is the formula to calculate hourly rate from salary?
Hourly rate = annual salary ÷ annual hours. For a standard 40-hour week over 52 weeks, divide by 2,080: $65,000 ÷ 2,080 = $31.25 per hour.
Should I subtract holidays and vacation from 2,080 hours?
Only if you want your rate per hour actually worked. For comparing offers, use 2,080 because paid holidays and PTO are part of the salary. Subtracting 11 holidays and 15 PTO days gives 1,872 hours.
How does unpaid overtime affect my hourly rate?
It lowers it. An exempt employee on $65,000 working 45 hours a week (2,340 hours a year) earns about $27.78 per hour instead of $31.25.
What hourly rate is $85,000 a year?
$85,000 a year is $40.87 per hour at 2,080 hours, or $45.41 per hour actually worked after 11 holidays and 15 PTO days.