If you are paid by the hour, the basic conversion to annual salary is simple: hourly rate × hours per week × weeks per year. That gives you a yearly figure before taxes and before any other deductions.
The tricky part is that your real yearly pay may be lower or higher than the basic math suggests. Paid time off, unpaid leave, overtime, bonuses, and varying schedules can all change the result, so the formula is a starting point, not the full story.
The basic formula
The core conversion uses three inputs:
- your hourly wage
- the number of hours you work in a typical week
- the number of weeks you are paid for in a year
Formula:
Annual pay = hourly wage × hours per week × weeks per year
For example, if you earn $20 an hour, work 40 hours per week, and are paid for 52 weeks, your annual pay is 41,600.
That is the simplest version of the calculation. It assumes your weekly hours stay the same all year and that every week counts the same way.
How to choose the right weeks per year
The “weeks per year” part depends on how your pay works.
If you are paid year-round
If you are salaried in all but name, or you simply work the same schedule every week and are paid all year, you may use 52 weeks in the formula.
If you have unpaid time off
If you take unpaid leave, the annual figure should use only the weeks you are actually paid. For example, if you work 40 hours per week, earn $18 per hour, and are paid for 50 weeks instead of 52, the annual pay is 36,000.
That is why two people with the same hourly wage can end up with different yearly income. The number of paid weeks matters just as much as the hourly rate.
If your schedule is seasonal
If your job only runs for part of the year, use the number of weeks you realistically expect to work. For example, if you work 30 hours per week for 24 weeks at $25 an hour, your annual pay is 18,000.
If your schedule changes from month to month, a simple annual estimate may only give you a rough idea. A work hours calculator can help you total irregular weeks before you convert them.
Paid time off vs unpaid time off
Paid time off does not reduce your yearly earnings in the same way unpaid time off does.
Paid time off
If your employer pays you during holidays, vacation, or sick leave, those days usually still count as paid time. In a basic hourly-to-annual conversion, paid time off is often included in the “weeks per year” total because you are still being paid.
For example, if you work 40 hours per week at $22 an hour and you are paid for the full 52 weeks, your annual pay is 45,760 even if some of those weeks include paid leave.
Unpaid time off
If a week is unpaid, it should usually be removed from the calculation. Suppose you normally work 40 hours per week at $22 an hour, but you take 2 weeks unpaid. Your paid weeks become 50, and the annual pay is 44,000.
The difference between paid and unpaid time off is one of the main reasons hourly workers should not rely on a single “hourly × 40 × 52” shortcut without checking how leave is handled.
Overtime can change the result
Overtime makes the annual estimate less predictable because not every hour is paid at the same rate.
If your employer pays a higher rate for overtime hours, the yearly total may be more than the basic formula suggests. If you often work extra hours, you need to estimate both:
- regular hours at your normal hourly rate
- overtime hours at the overtime rate
For example, imagine you earn $18 an hour, normally work 40 hours a week, and sometimes work 5 overtime hours at a higher rate. If your overtime rate is 1.5 times normal pay, the weekly pay is:
- regular pay: 720
- overtime pay: 135
- total weekly pay: 855
If that pattern lasts for 52 weeks, the annual total is 44,460.
If you have fluctuating overtime, use an average week that reflects your real schedule. For help with conversions in the other direction, see how to read your pay stub, where the pieces of pay are broken down in plain language.
Worked examples
Here are a few complete examples with round numbers.
Example 1: Standard full-time hours
You earn $15 per hour and work 40 hours per week for 52 weeks.
Annual pay = 31,200
This is the cleanest case because the hours are steady and there is no unpaid leave.
Example 2: Same wage, but unpaid leave
You still earn $15 per hour and work 40 hours per week, but you are paid for 48 weeks.
Annual pay = 28,800
This example shows how unpaid time off lowers the yearly total even when the hourly wage does not change.
Example 3: Part-time schedule
You earn $18 per hour and work 24 hours per week for 52 weeks.
Annual pay = 22,464
Part-time workers often need this version because the weekly hours are the main difference from a full-time schedule.
Example 4: Hourly pay with overtime
You earn $20 per hour, work 40 regular hours and 10 overtime hours each week, and overtime is paid at 1.5 times your normal rate.
Weekly pay = 1,100 Annual pay = 57,200
This is the kind of case where a simple hourly-to-annual formula is only a baseline, not the full estimate.
What the result does not include
The annual figure from the formula is usually a gross estimate, not your take-home pay.
It does not automatically include:
- income tax
- social contributions
- health insurance premiums
- retirement deductions
- union dues
- wage garnishments
- bonuses or commissions, unless you add them separately
That means an hourly-to-annual conversion is useful for budgeting, comparing job offers, or checking whether a role is in the range you want. It is not the same as your net pay.
If you are comparing pay offers in different currencies, use a currency converter only after you have converted each role to the same pay period. That keeps the comparison clear.
Limits of the shortcut
The formula works best when your hours are stable and your pay is simple. It becomes less accurate when:
- your weekly hours change often
- your overtime varies
- you have unpaid leave
- you earn commission or bonuses
- your pay structure includes shift premiums or tips
In those cases, use an average over several pay periods rather than one random week. A monthly average can also help if your schedule changes through the year.
The definition of wage itself also matters, because “wage” can mean different things depending on context. The Wikipedia article on wage gives a general overview, but for your own pay rules, always rely on your contract, pay stub, or official payroll source.
A practical way to check your own annual pay
Use this process:
- Write down your hourly rate.
- Decide how many hours you usually work in a week.
- Decide how many of those weeks are actually paid.
- Add overtime only if you expect it regularly.
- Multiply the numbers.
- Compare the result with your pay stub or contract.
If your hours vary, calculate an average from several recent pay periods rather than guessing. If you want to move from a rough estimate to a cleaner total, track your hours first and then apply the formula.
Frequently asked questions
- How do I convert hourly wage to annual salary?
- Multiply your hourly wage by your weekly hours and by the number of paid weeks in the year. The basic formula is annual pay = hourly rate × hours per week × weeks per year. If your schedule includes unpaid leave or overtime, adjust the weeks or hours first.
- Should I use 52 weeks for the calculation?
- Only if you are paid for all 52 weeks. If you take unpaid time off, use the number of weeks you are actually paid. Paid vacation usually stays in the calculation because you are still earning wages during that time.
- Does overtime count in annual salary?
- Yes, if you expect it regularly. You need to calculate regular hours and overtime hours separately, because they may be paid at different rates. If overtime is occasional, the annual total will be only an estimate.
- Is annual salary the same as take-home pay?
- No. The annual figure from this formula is usually gross pay before taxes and deductions. Your take-home pay will be lower if money is withheld for tax, insurance, retirement, or other deductions.
- What if my hours change every week?
- Use an average based on several pay periods. A single week can be misleading if you worked extra hours or took time off. Averaging your hours gives a better annual estimate than using one unusual week.
- How do paid holidays affect the conversion?
- If you are paid on holidays, those days usually stay in the annual total because you are still being paid. The key question is whether the time is paid or unpaid, not whether you were physically at work. Check your contract or payroll rules if the treatment is unclear.
- Can I use this formula for part-time work?
- Yes. Just use your real weekly hours, not a full-time assumption. Part-time pay is often best estimated by averaging your actual schedule over a typical week and then multiplying by the number of paid weeks.
About this article
Written by Yahav Atia, WSO – the digital agency (wso.co.il) that owns and founded this site, with the help of AI, and passed automated quality checks before publication. Numbers in the worked examples were computed in code, not estimated. This is general information, not financial or investment advice; check the figures against your own situation and official sources.