Converting an annual salary to an hourly rate sounds simple — divide by 2,080 hours (52 weeks × 40 hours). But that gives you a gross figure that ignores PTO, holidays, benefits costs, and payroll taxes. Here is the complete picture.
Basic formula: salary ÷ 2,080
A $75,000 salary ÷ 2,080 working hours = $36.06/hour gross.
This is the rate an employer uses for overtime calculations and the figure most pay stubs reference. But it is not what you actually earn per hour worked.
Accounting for paid time off
If you receive 15 days PTO + 10 federal holidays = 25 days off = 200 hours. You work 2,080 − 200 = 1,880 hours per year. Your effective hourly rate: $75,000 ÷ 1,880 = $39.89/hour. You are paid for the time you do not work too, but if you want to know what you cost per productive hour, use this figure.
After-tax hourly rate
At a 22% effective federal tax rate and 6.2% FICA: - Net salary: $75,000 × (1 − 0.22 − 0.062) = ~$53,850 - Net hourly (÷ 2,080): $25.89/hour take-home
Freelance rate vs. employed rate
Freelancers must add self-employment tax (15.3%), benefits, unpaid admin time, and vacancy risk. A freelancer needing $75k equivalent must typically charge $55–$70/hour to match the total compensation of a salaried employee.
Use the salary to hourly calculator to model your specific situation.