What’s Your Paycheck Worth? Here’s How Your Salary Breaks Down Per Hour
When you’re looking for a job or negotiating your salary after a job offer, your mind may be swirling with numbers. Some companies quote an hourly wage, while others quote an annual salary, especially for mid-level management or higher roles.
Check Out: 6 Ways To Build Wealth in Your 60s
Read Next: 5 Genius Things All Wealthy People Do With Their Money
It can get confusing to understand how it all breaks down, especially if you are transitioning from an hourly wage role to a salaried position. When you negotiate with an employer, you’ll want to be sure you’re comparing apples-to-apples and also making your counteroffer in the same terms they used to share to make an offer.
In other words, if an employee offers you $100,000 per year, you should know in the back of your mind that this equals roughly $48 an hour. If you’d prefer to make $50 an hour, you should counter with $104,000 or higher.
How do you calculate your hourly wage if you receive an offer with an annual salary?
Calculating Hourly Wage or Annual Salary
Let’s assume you’re working a 40-hour week, every week. Many jobs offer paid time off (PTO) of two weeks or more, in the form of vacation time or sick days. But to keep calculations simple, let’s assume you work 40 hours for 52 weeks each year.
40 x 52 = 2,080 hours per year.
To convert an annual salary to hourly wage, divide the annual salary by 2,080.
To go in the other direction and find out how much your hourly wage equals on an annual basis, multiply your hourly wage by 2,080 hours.
GOBankingRates has done the math for you on the table below so you can convert your annual salary to an hourly rate at a glance.
Annual Salary | Hourly Wage |
$30,000 | $14.42 |
$40,000 | $19.23 |
$50,000 | $24.04 |
$60,000 | $28.85 |
$70,000 | $33.65 |
$80,000 | $38.46 |
$90,000 | $43.27 |
$100,000 | $48.08 |
$150,000 | $72.12 |
$200,000 | $96.15 |
$250,000 | $120.19 |
What You Should Know About Your Salary
The chart above can help with salary negotiatons and also budgeting. But keep in mind that job recruiters always post the gross pay, and not your net pay. Net pay includes deductions for FICA taxes, which is 7.65% of your gross pay. FICA stands for the Federal Insurance Contributions Act and covers Social Security and Medicare contributions.
Net pay may also include deductions for a 401(k) or other retirement plan, health insurance, and employee contributions to other employee benefits, such as dental, vision, or group life insurance.
Deductions also include federal withholding tax, which covers income tax payments. Depending on your overall pay and the number of dependents you claim, your employer might withhold between 10% and 30% of your gross income for federal income tax.
If you withhold too much, you will get a tax refund. But if you don’t withhold enough, you’ll have to pay the balance by April 15 of the following year. You can always adjust your W-4 form to put more money in your pocket every payday or to withhold more taxes to minimize your tax liability at the end of the year.
Bottom Line
Learn More: How I Make $5,000 a Month in Passive Income Doing Just 10 Hours of Work a Year
Knowledge is key when it comes to job negotiations and budgeting. The chart above does not include overtime or PTO, but can provide a starting point to understand how much you can earn.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: What’s Your Paycheck Worth? Here’s How Your Salary Breaks Down Per Hour