One offer says $62,400 a year. Another says $30 an hour. Which pays more?
On paper they are the same: $30 an hour for a full-time, year-round schedule works out to the same gross pay. In practice the answer depends on the hours you will actually work, whether you are paid for overtime and time off, and what benefits come with each job. Taxes treat a dollar of salary and a dollar of hourly pay the same way, but overtime now has a federal deduction of its own, and benefits can change your taxes too.
This guide shows how to convert one to the other, what to adjust for, and how to compare the two offers on take-home pay after 2026 taxes. The salary to hourly calculator and the paycheck calculator do the math.
Salary vs hourly: what’s actually different
The real difference is not how pay is quoted but how the Fair Labor Standards Act treats the job.
- Nonexempt employees, which includes most hourly workers, must be paid overtime for hours over 40U.S. Department of Labor in a workweek, at no less than time and a half their regular rate.
- Exempt employees are not owed overtime. Many salaried jobs are exempt, but being paid a salary does not decide it on its own. The IRS, summarizing the law for its new overtime deduction, notes there are many exemptions from the overtime requirement and that whether you are covered “is a fact-specific determination that depends on the individual’s occupation, work activities, and/or earnings.”IRS
So the useful comparison is often “exempt salary” vs “hourly with overtime.” Some salaried employees are nonexempt and do get overtime; check your offer letter or ask HR.
How to convert salary to hourly (and back)
The conversion is simple division:
Hourly rate = annual salary ÷ (hours per week × paid weeks per year)
For a $75,000 salary at 40 hours a week and 52 paid weeks, that is $36.06 an hour.
Going the other way, multiply: $30 an hour at 40 hours a week for 52 weeks is $62,400 a year, or $2,400 every two weeks before taxes.
Those are the “headline” conversions. Three adjustments make them realistic.
Adjust for the hours you will really work
A salaried job that routinely runs 50 hours a week pays less per hour than the headline figure. The same $75,000 at 50 hours a week is $28.85 an hour. If the job is exempt, those extra hours are unpaid.
Adjust for unpaid weeks
Salaried employees are normally paid for holidays and vacation. Many hourly employees are paid only for hours worked, so unpaid holidays, a seasonal shutdown or unpaid leave reduce annual pay. At $30 an hour, 50 paid weeks instead of 52 brings the year to $60,000.
Adjust for paid time off
Paid time off works the other way: you are paid the same but work fewer hours, so your pay per hour actually worked goes up. With 15 paid days off, a $75,000 salary pays $38.27 per hour worked. The calculator’s “paid days off” field shows this.
Overtime: the biggest difference
For a nonexempt worker, overtime can turn a lower-looking hourly rate into the better offer. Federal law requires time and a half for hours over 40 in a workweek. The Department of Labor’s overtime fact sheet adds two points people often get wrong: the law does not require overtime pay for weekends or holidays as such, and it sets no limit on the hours adults may work in a week.U.S. Department of Labor Some states have stricter overtime rules of their own.
Here is what five overtime hours a week does for a $30-an-hour worker in Texas, a single filer paid biweekly. Without overtime, take-home pay is $52,319 a year. With five overtime hours every week, it is $60,959.
On a paycheck, overtime is taxed like the rest of your wages: federal income tax, Social Security, Medicare and state tax all apply. Publication 15 lets employers treat overtime either as regular wages or as supplemental wages for withholding, so a big overtime week can be withheld at a different rate from a normal one.IRS
The new federal deduction for overtime
P.L. 119-21, the 2025 federal tax law, added a deduction for “qualified overtime compensation” for tax years 2025 through 2028.IRS What it covers is narrower than many headlines suggest:
- Only the premium. The deduction is for the part of overtime pay above your regular rate, such as the “half” in time and a half. Your regular rate for those hours is still taxable.
- Only overtime the FLSA requires. If you are exempt from the FLSA overtime rule, overtime paid under a union contract or other arrangement does not qualify. If your employer pays double time, only the half-time portion the FLSA requires counts.
- Capped and phased out. The maximum is $12,500 a year ($25,000 on a joint return), reduced once modified adjusted gross income passes $150,000 ($300,000 joint). Married people must file jointly to claim it.
- Income tax only. Overtime is still subject to Social Security and Medicare.
- Claimed on your return. For 2026 and later, employers must report qualified overtime separately on your W-2. To get the benefit in your paychecks rather than as a refund, enter your expected deduction in Step 4(b) of a new W-4, as our W-4 guide explains.
Run the $30-an-hour worker’s full year of wages, including those five overtime hours a week, through the federal income tax calculator. Their 2026 federal income tax comes to $7,472 without the deduction and $6,614 with the “half” portion of their overtime deducted. State income tax may not follow the federal deduction; check your state.
Benefits: look beyond the paycheck
Two offers with the same pay can be worth very different amounts once benefits are counted. Some benefits also change your taxes:
- Health insurance. What your employer pays toward your coverage is not taxable to you, and your share of premiums paid through a Section 125 cafeteria plan comes out before federal income tax, Social Security and Medicare.IRS A job with a lower premium leaves more take-home pay.
- Retirement match. An employer 401(k) match is extra compensation that does not show up in your paycheck. Your own traditional 401(k) deferrals lower federal income tax withholding but not Social Security or Medicare.
- HSA contributions. Employer HSA contributions and your own contributions through a cafeteria plan are tax-free up to the annual limit.
- Eligibility. Part-time and hourly roles sometimes have different eligibility rules or waiting periods for benefits. Ask.
To include your premiums and 401(k) in a take-home estimate, enter them in the paycheck calculator’s pre-tax deduction fields.
Compare take-home pay after tax
Once the gross pay is equal, take-home pay is equal too. A $62,400 salary and $30 an hour for 40 hours a week, both in Texas and both for a single filer, take home $52,319 and $52,319 a year. Federal withholding, FICA and state tax do not care whether you are paid by the hour or by the year.
What does differ:
- Variability. Hourly pay moves with your schedule. A slow month means a smaller paycheck, and withholding is figured per paycheck, so irregular hours can make withholding uneven over the year.
- Overtime. The hourly job may pay more in busy periods, and that overtime now carries a federal deduction for the premium portion.
- Paid time off and holidays. Usually built into a salary; sometimes unpaid for hourly work.
- Location. Both offers are taxed by the state you live and work in. Compare states with the state income tax comparison.
For a detailed paycheck for either offer, switch the paycheck calculator between “Salary” and “Hourly,” and enter overtime hours if you expect them.
A checklist for comparing two offers
| Question | Why it matters |
|---|---|
| Is the job exempt or nonexempt from overtime? | Decides whether extra hours are paid |
| How many hours a week will you really work? | Changes your true hourly rate |
| How many paid holidays and vacation days? | Unpaid time off lowers annual pay for hourly jobs |
| What do health premiums cost per paycheck? | Pre-tax premiums lower take-home and taxes |
| Is there a 401(k) match, and how soon? | Extra pay outside the paycheck |
| Will overtime qualify for the federal deduction? | Only FLSA-required premium pay counts |
| Which state (and city) will tax the pay? | State and local taxes vary widely |
Frequently asked questions
How do I convert a salary to an hourly rate?
Divide the salary by the hours you are paid for in a year: hours per week times paid weeks. Adjust for unpaid weeks and for the hours you really work. The salary to hourly calculator does this, including paid time off.
Is hourly or salary better for taxes?
Neither. Wages are taxed the same way however they are quoted. The differences come from overtime (now with a federal deduction for the premium portion), benefits paid pre-tax and how evenly your pay is spread over the year.
Is overtime taxed more than regular pay?
No. Overtime is ordinary wages. It can look heavily taxed because a large paycheck is withheld as if you earned that much every period, or because your employer withholds on it as supplemental wages. Your return settles the actual tax, and for 2026 you may be able to deduct the qualified overtime premium.
Do salaried employees get overtime?
Only if they are nonexempt under the FLSA, which depends on the job’s duties and pay rather than on being salaried. Exempt employees are not owed overtime for extra hours.