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How to use the salary calculator
- 1Enter the pay amount and say which period it refers to.
- 2Set your weekly hours and paid weeks per year.
- 3Enter your total deduction percentage if you want a take-home estimate.
- 4Read the full breakdown by period.
Why hourly and salaried figures are hard to compare
The naive conversion — annual ÷ 2,080 — assumes 40 hours a week for 52 weeks and treats an hourly worker and a salaried one as equivalent. They are not, and the gap runs in both directions.
A salaried employee is typically paid for holiday, so their annual figure already covers time not worked. A contractor charging an hourly rate is not: every day off is unpaid, which effectively removes five to six weeks of income from a comparable annual figure. Setting paid weeks to 46 or 47 rather than 52 models this.
The other direction matters too. A salaried role expected to run at 50 hours a week has a real hourly rate 25% below its nominal one, and no overtime to compensate. When comparing offers, convert both to an effective hourly rate using realistic hours rather than contractual ones.
What the deduction percentage covers
This is deliberately a single number rather than a tax model, because tax systems differ so much between countries that any built-in model would be wrong for most visitors. Put in the combined figure for income tax, social security or national insurance, and any pension contribution taken at source.
As very rough starting points: a mid-income employee typically loses somewhere between 20% and 35% in the US depending on state, 25% to 40% in the UK once national insurance and pension are included, and 35% to 45% in much of western Europe. Your payslip is the authoritative source — take the deductions total and divide by gross.
Marginal rates are what matter for a raise. If you are near a threshold, the extra income may be taxed at a higher rate than your average, so a 10% raise does not mean 10% more take-home. The average rate this tool uses is right for comparing whole salaries, not for evaluating an increment.
Contract rates need a bigger multiplier than people expect
Moving from employment to contracting means absorbing costs an employer previously covered. Holiday and sick pay disappear. Employer pension contributions stop. Employer-side payroll taxes may become yours. Equipment, insurance, accounting and training become your expenses.
You also cannot bill 100% of your time. Finding work, invoicing, admin and gaps between contracts are all unpaid, and 70–80% utilisation is a realistic planning assumption rather than a pessimistic one.
Taken together, the common guidance is that a contract rate needs to be roughly 1.5 to 2 times the equivalent employed rate to leave you level. Use this calculator by setting paid weeks to around 44 and comparing the annual figures rather than the headline rates.
What is not in the salary number
Employer pension matching is often the largest omission. A 5% employer contribution is 5% of additional compensation that never appears in the salary figure and is easy to overlook when comparing offers.
Health insurance, where the employer pays a premium, can be worth thousands a year. So can paid parental leave, professional development budgets, equipment allowances and equity.
Commuting is a real cost on the other side. A role paying 10% more that adds an hour of travel each way costs roughly ten hours a week plus the fare — which, converted back to an hourly rate, frequently wipes out the increase entirely.
Frequently asked questions
How do I convert an annual salary to hourly?
Divide by your actual annual hours — weekly hours times paid weeks. The common 2,080 figure assumes 40 hours for 52 weeks, which overstates it for anyone with unpaid leave.
What deduction percentage should I use?
Take the deductions total from a recent payslip and divide by gross pay. That is more accurate than any general figure.
How much should a contract rate be?
Typically 1.5–2× the equivalent employed rate, to cover unpaid leave, lost benefits, business costs and gaps between contracts.
Does this model my country's tax bands?
No — it applies a single percentage you supply. Tax systems vary too much for a general model to be accurate.
Why does my raise not increase take-home proportionally?
Because additional income is taxed at your marginal rate, which is usually higher than your average rate. This tool uses an average.
Is my salary information stored?
No. Nothing you type leaves your browser.