Forty hours a week times 52 weeks is 2,080 hours. Multiply an hourly wage by 2,080 and you have an annual salary; divide a salary by 2,080 and you have an hourly rate. So 25 an hour is 52,000 a year, and 85,000 a year is 40.87 an hour. That is the whole standard method and it is correct as arithmetic. Whether it is correct as a description of your life depends on a handful of assumptions that deserve a look.
One small side note: a calendar year has about 52.18 weeks, not 52, so some employers use 2,087 hours (that is 52.18 x 40) for the conversion. U.S. federal pay conversions use that figure. On a 25 an hour wage, the difference between the two methods is about 175 a year. Neither is wrong. They are different conventions, and you should know which one your payroll uses.
If you are an employee with paid holidays and paid time off, the 2,080 figure holds, because your paycheck does not drop when you are away. For a contractor or a worker without paid leave, it breaks. Suppose you take ten public holidays and fifteen vacation days unpaid, 25 days or 200 hours. You bill only 1,880 hours. At 25 an hour, that is 47,000, not 52,000.
To earn the same 52,000 over those 1,880 hours, you need a rate of 52,000 / 1,880 = 27.66 an hour, which is about 10.6% above the employee-equivalent wage. And that is before the costs that employees often do not see: health coverage, retirement contributions, payroll tax differences, equipment, and unbilled time spent finding work. A rule of thumb many freelancers use is that the rate must be well above the equivalent wage. How far above depends on the benefits you are replacing and the work you can realistically bill.
Say you are choosing between two offers. One is a salary of 50,000 for a standard full-time role. The other is 28 an hour at 30 hours a week. Multiplying the second by 2,080 gives 58,240, which looks much better. But 28 x 30 x 52 is 43,680, a difference of more than 14,500. Always multiply by your real weekly hours. The same applies to seasonal work, where weeks without hours can drop the annual figure further.
Going the other direction, salaried employees often work more than 40 hours. A salary of 85,000 for a 50-hour week is an effective 85,000 / (50 x 52) = 32.69 an hour, not 40.87. Neither number is the true value of the job, but comparing hourly equivalents across roles is a clean way to see which one pays you more per hour of your life.
Overtime changes the picture for non-exempt hourly workers. At a 25 base rate with time-and-a-half, each overtime hour pays 37.50. Ten overtime hours a week adds 375 per week, which is 19,500 over 52 weeks, close to 38% on top of the 52,000 base. The rules for who qualifies for overtime and at what multiple vary by country and job category, so check yours. For salaried exempt roles, extra hours generally earn nothing extra, which drives the effective hourly rate down as hours rise.
Converting to a per-paycheck figure depends on the pay schedule. On a 70,000 salary:
A frequent slip is estimating monthly income as four weeks of pay. If you earn 1,000 a week, 4 x 1,000 x 12 gives 48,000, but you will actually earn 52,000, since a month averages 4.33 weeks. The error runs about 8% low. Biweekly workers also get two months a year with three paychecks, which is worth planning for if you budget by month.
The same multiplier helps with raises. A one-dollar-an-hour increase is worth 2,080 a year before tax for a full-time worker, which is a handy number to carry around. A 3% raise on a 25 wage brings it to 25.75, which is 53,560 a year instead of 52,000, an extra 1,560. When you are negotiating, translating a vague "small bump" into an annual dollar figure makes the conversation concrete. It also shows when a bump is smaller than it looks: a raise that merely matches 3% inflation does not change your purchasing power at all.
The salary calculator converts between hourly, weekly, biweekly, monthly and annual figures so you can test different hours and weeks worked. Since gross pay is not what reaches your account, follow it with the take-home pay calculator to estimate what is left after tax, and use the hours calculator if you need to add up a week of irregular shifts first.
The summary is simple. 2,080 is a good starting multiplier and a bad final answer. Replace it with your own hours as soon as you know them, and a lot of apparent pay differences between jobs shrink or flip.
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