How to Calculate Annual Income
(Gross Income & After Tax Income)
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What state do you live in?
Gross Annual
Income
$54,600.00
Adjusted Hourly
Wage
$31.84
Total Work Hours
in a Year
1,715
Effective Income
Tax Rate
19.69%
Net Annual Income
$43,848.77
About the Annual Income Calculator
This annual income calculator finds out how much you make per year by calculating your annual income from your hourly wage. The annual income calculation used in this calculator is based on your hourly wage, the number of hours that you work per week, and the amount of paid time off that you have per year. Your gross annual income, which is your income before tax is deducted, is then adjusted by your state's income tax to get your net annual after-tax income. This allows you to find out your annual take-home pay from your hourly wage.
Annual Income Calculator Terms
Paid Time Off per Year: Paid time off (PTO) includes paid holidays, vacation days, sick days, and personal days.
State: The calculator uses your state to calculate your income tax rate.
Gross Annual Income: Your annual income before taxes.
Net Annual Income: Your annual income after taxes.
Total Work Hours in a Year: This excludes your paid time off. The annual income calculation assumes that there are 52 working weeks in a year.
Adjusted Hourly Wage: Your hourly wage adjusted for your paid time off. In other words, your adjusted hourly wage is your gross annual income divided by your total work hours in a year.
Effective Income Tax Rate: This is the income tax you will have to pay as a percentage of your gross income.
How to Use the Annual Income Calculator
To use this annual income calculator, you will need to know three values: your hourly wage, hours worked per week, and the amount of paid time off per year. Here are the steps to using this calculator:
- Hourly Wage: Your hourly wage is how much money you make for every hour that you work. Being paid by the hour, which is also called hourly pay or hourly rate, is different from being paid a salary. Salaried employees are paid a fixed amount of money for working a certain period of time, such as a month or a year. On the other hand, hourly employees are paid by the hour.
- Hours per Week: Since you are being paid by the hour, the more hours you work, the more money you will earn. You are generally considered to be working full-time if you work 30 hours or more per week. Part-time employees will work less than 30 hours per week. In the United States, a 35-hour working week or a 40-hours working week is common for full-time jobs.
- Paid Time Off: Holidays, vacation days, sick days, and personal days are days that you will not be working. Employers are not required by law to pay for these days. Instead, your paid time off will be negotiated in your job contract. Having paid time off means that your total working hours per year will be less but your annual income will remain the same. This is as if you were working on those days.
- Results: After entering your inputs into the calculator, you will be able to find out your annual income. It also estimates income taxes that you might have to pay. This will give you your net annual income.
How to Calculate Annual Income
The easiest way to calculate annual income is to multiply your hourly wage by 2,000. That’s because someone who works full-time for a year would work around 2,000 hours per year. For example, if your hourly wage is $20, then your annual income would be roughly $40,000 if you work full-time. This annual income estimation assumes that you work around 38.5 hours every week.
For a more accurate answer, you can use the following annual income formula:
Annual Income = Hourly Wage x Hours Worked per Week x Weeks per Year
You can calculate your working hours per week by multiplying your hours per day by the number of days that you work per week.
While this calculator can be used to easily calculate annual income, you still might be wondering how you can find annual income or even how annual income works. Let’s take a look at some examples of calculating your annual income.
Examples of Calculating Annual Income
- Hourly Employee
Let’s say that your hourly wage is $15 and you work eight hours per day, from Monday to Friday. With five working days in a week, this means that you are working 40 hours per week.
Using the annual income formula, the calculation would be:
Annual Income = $15/hour x 40 hours/week x 52 weeks/year
Annual Income = $31,200
Your annual income would be $31,200.
- Hourly Employee with Unpaid Time Off
Being paid by the hour means that your annual income is affected by the number of hours that you work. Let’s use the same example as above with someone working 8 hours per day at an hourly rate of $15. However, they take two weeks off in a year unpaid, such as for unpaid vacation or holidays. How much would they make in a year?
Annual Income = $15/hour x 40 hours/week x 50 weeks/year
Annual Income = $30,000
By having two weeks unpaid, their annual income would be $30,000, which is $1,200 less compared to the previous example. If the employee had negotiated to have these two weeks as paid time off, then their annual income would be $31,200 instead.
- Daily
Wage
Some workers might be paid a daily wage, rather than an hourly wage. For example, let’s say that someone makes $200 per day. If someone works five days a week, then they would be working 260 days every year. That’s from 5 days a week multiplied by 52 weeks.
Using these numbers, $200 per day x 260 working days = $52,000
Their annual income would be $52,000 based on a daily wage of $200 per day.
- Salaried Employee
Employees working on salary are paid based on working a set number of hours every week, with their salary being based on the period of time worked, and not necessarily the number of hours worked. For example, a salaried employee might be paid $5,000 per month. To calculate their annual income, you would multiply their monthly salary by 12.
Annual Income = $5,000 per month x 12 month/year
Their annual income would be $60,000.
What is Annual Income?
Knowing your annual income is important when it comes to budgeting. You will also need to know your annual income when applying for credit, such as for a mortgage loan or a credit card. Let’s take a look at the components that make up annual income, and how each part can affect your annual income.
Hourly Wage
The two key numbers when calculating annual income are your hourly wage and the number of hours worked. Your hourly wage is the amount of money that you make per hour of work. In the United States, the federal minimum wage is $7.25 per hour. This hasn't changed since 2009. However, your state may have a higher minimum wage.
2022 Minimum Wage by State
| Alabama | $7.25 |
| Alaska | $10.34 |
| Arizona | $12.80 |
| Arkansas | $11.00 |
| California | $14.00 |
| Colorado | $12.56 |
| Connecticut | $13.00 |
| Delaware | $10.50 |
| Washington D.C. | $15.20 |
| Florida | $10.00 |
Expand
Source: U.S. Department of Labor, as of January 1, 2022
30 states have a higher minimum wage than the federal minimum wage. The federal minimum wage applies to states with a lower state minimum wage, or if the state has no minimum wage. Five states have no state minimum wage: Alabama, Louisiana, Mississippi, South Carolina, and Tennessee.
The minimum wage that applies to you can also depend on your occupation. Jobs that receive tips, such as being a waiter or waitress, may result in a lower statutory minimum wage applying to you. For example, the minimum wage for tipped employees in Wyoming is $2.13 per hour. You are considered to be a tipped employee in Wyoming if you regularly receive more than $30 a month in tips, according to Wyoming's labor and employment laws.
What qualifies as income?
Employment income might be hourly wages, salary, tips that you receive, and bonuses. Employment income is just one part of annual income. Your annual income would include other income that you receive, such as social security, pensions, welfare, child support, capital gains, rental income, self-employment income, and business income. You will need to take into account all of your income sources when determining your annual income.
Most states are increasing their minimum wage in 2022. This would increase the annual income of minimum wage workers as the cost of living in the U.S. continues to increase, brought on by high U.S. inflation. The largest minimum wage increase for 2022 is in Virginia, where the state minimum wage is increasing by $1.50. This brings Virginia's minimum wage from $9.50 in 2021 to $11.00 in 2022.
Minimum Wage Increases in 2022
| Arizona | $12.15 | $12.80 | +$0.65 |
| California | $14.00 | $15.00 | +$1.00 |
| Connecticut | $13.00 | $14.00 | +$1.00 |
| Florida | $10.00 | $11.00 | +$1.00 |
| Illinois | $11.00 | $12.00 | +$1.00 |
| Maine | $12.15 | $12.75 | +$0.60 |
| Maryland | $11.75 | $12.50 | +$0.80 |
| Massachusetts | $13.50 | $14.25 | +$0.75 |
| Michigan | $9.65 | $9.87 | +$0.22 |
| Minnesota | $10.08 | $10.33 | +$0.25 |
| Missouri | $10.30 | $11.15 | +$0.85 |
| Montana | $8.75 | $9.20 | +$0.45 |
| Nevada | $8.75 | $9.50 | +$0.75 |
| New Jersey | $12.00 | $13.00 | +$1.00 |
| New Mexico | $10.50 | $11.50 | +$1.00 |
| New York | $12.50 | $13.20 | +$0.70 |
| Ohio | $8.80 | $9.30 | +$0.50 |
| Oregon | $12.75 | $13.50 | +$0.75 |
| Rhode Island | $11.50 | $12.25 | +$0.75 |
| South Dakota | $9.25 | $9.95 | +$0.70 |
| Vermont | $11.75 | $12.55 | +$0.80 |
| Virginia | $9.50 | $11.00 | +$1.50 |
| Washington | $13.69 | $14.49 | +$0.80 |
Source: Paycor
Hourly Wage Stats
According to the U.S. Bureau of Labor Statistics, the average hourly earnings of all nonfarm employees in the private sector was $31.73 per hour in March 2022. That's higher than the average hourly earnings of $30.06 in March 2021.
Hourly wages vary considerably based on sector. For example, the average hourly earnings of an employee working in retail was $22.89 per hour, while an employee in the financial sector had an average hourly earnings of $45.17 per hour. Employees in leisure and hospitality had the lowest average hourly earnings, at $19.68 per hour.
U.S. Average Hourly Earnings by Industry
| Total private | $30.06 | $31.73 | +$1.67 |
| Goods-producing | $30.45 | $31.97 | +$1.52 |
| Mining and logging | $34.30 | $35.75 | +$1.45 |
| Construction | $32.24 | $34.07 | +$1.83 |
| Manufacturing | $29.20 | $30.55 | +$1.35 |
| Durable goods | $30.70 | $32.11 | +$1.41 |
| Nondurable goods | $26.69 | $27.96 | +$1.27 |
| Private service-providing | $29.97 | $31.67 | +$1.70 |
| Trade, transportation, and utilities | $25.83 | $27.44 | +$1.61 |
| Wholesale trade | $33.20 | $34.71 | +$1.51 |
| Retail trade | $21.50 | $22.89 | +$1.39 |
| Transportation and warehousing | $25.76 | $27.79 | +$2.03 |
| Utilities | $44.24 | $46.71 | +$2.47 |
| Information | $44.06 | $45.17 | +$1.11 |
| Financial activities | $39.77 | $41.19 | +$1.42 |
| Professional and business services | $35.80 | $38.18 | +$2.38 |
| Education and health services | $29.46 | $31.24 | +$1.78 |
| Leisure and hospitality | $17.60 | $19.68 | +$2.08 |
| Other services | $27.22 | $28.18 | +$0.96 |
What is overtime?
Overtime is when you work more than a certain number of hours in a week. You may be entitled to overtime pay for working more hours, and overtime pay is usually 1.5x your regular pay. In most cases, you may be eligible for overtime pay if you work more than 40 hours in a week. The Fair Labor Standards Act (FLSA) sets rules surrounding labor, including rules regarding overtime pay. Some occupations, such as executive, administrative, and professional employees, are exempt and are not covered by the FLSA.
Working Hours
The average employee works just under 35 hours a week. In March 2022, the average was 34.6 hours per week. Just like wages, the number of hours worked also depends on your industry. Employees in mining and logging work for an average of 45.7 hours a week, while those in leisure and hospitality work for an average of 26 hours a week. Meanwhile, manufacturing employees work an average of 3.4 hours overtime a week.
U.S. Average Work Hours per Week
| Total private | 34.9 | 34.6 |
| Goods-producing | 40.2 | 40.1 |
| Mining and logging | 45.6 | 45.7 |
| Construction | 39.4 | 38.8 |
| Manufacturing | 40.5 | 40.7 |
| Durable goods | 40.7 | 41.0 |
| Nondurable goods | 40.1 | 40.1 |
| Private service-providing | 33.9 | 33.6 |
| Trade, transportation, and utilities | 34.5 | 34.0 |
| Wholesale trade | 39.1 | 39.4 |
| Retail trade | 30.7 | 30.2 |
| Transportation and warehousing | 39.2 | 37.9 |
| Utilities | 42.7 | 42.5 |
| Information | 37.1 | 36.9 |
| Financial activities | 37.7 | 37.6 |
| Professional and business services | 36.7 | 36.7 |
| Education and health services | 33.5 | 33.5 |
| Leisure and hospitality | 26.2 | 26.0 |
| Other services | 32.6 | 32.3 |
Source: U.S. Bureau of Labor Statistics Table B-2
Paid Time Off
Employers aren’t required to give employees paid time off, whether that’s paid holidays or vacation days. Instead, you will need to negotiate your paid time off.
According to the U.S. Bureau of Labor Statistics, the average worker gets 8 days of paid holidays every year. 79% of all workers have paid holidays or paid sick leave. The average worker has 11 days of paid vacation after working 1 year. For workers at the same company for more than 5 years, the average paid vacation days increases to 15 days per year. The annual income calculator on this page assumes 15 days of paid time off per year. You can adjust this number to fit your specific circumstances.