Annual Income Calculator: Gross and Net Income
Gross Annual
Income
$54,600.00
Adjusted Hourly
Wage
$31.84
Total Work Hours
in a Year
1,715
Effective Income
Tax Rate
19.47%
Net Annual Income
$43,971.27
What You Should Know
- Using this annual income calculator, you can estimate your annual gross and net income and your effective tax rate and adjusted hourly wage.
- Annual income refers to the amount of money earned in one year, which may be helpful for budgeting since some earnings and expenses may not be consistent throughout the year.
- To calculate annual income, you should add up your hourly wage earnings, your salary, and any other earnings you may receive over the year.
About This Annual Income Calculator
This Annual Income Calculator enables you to find before and after-tax annual incomes based on your hourly wage. It can be helpful to estimate your annual salary when you are being paid hourly. This calculator can also help you compare wages and salaries from different jobs before accepting a job offer.
This calculator requires you to input your hourly wage, the number of hours you work per week, and the number of PTO days you get every year. These values are used to estimate your gross annual income. The calculator also requires you to input the state you live in to estimate your after-tax income accurately. If you know your annual gross income and you want to estimate the amount of tax you have to pay, you can use the income tax calculator to do so.
What is Annual Income: Understanding Your Earnings
Annual income refers to the amount of money you earn in a single year. Knowing your annual income is essential for budgeting purposes because some earnings or expenses may not be consistent enough to account for daily or even monthly. You may also need to know your annual or even earned income when applying for a loan or a mortgage. To estimate your annual income, you should add up all of your earnings together. Even though there are many different types of earnings, they can be split into three categories as follows.
Hourly Wage
Hourly wage is a standard compensation structure where employees get paid for each hour of work they do. If they work different hours, their daily earnings may differ depending on how many hours they work. Hourly wage compensation structure is often applied to low-skill jobs with a high turnover rate. It may also be applied to seasonal jobs that do not have consistent working hours. This Annual Income Calculator can be used as an Hourly Wage to Salary calculator because it can estimate your annual income based on your hourly wage and the number of hours you work per week.
There is a minimum wage set by the US Federal government. Some states choose to set their own minimum wage as long as it is higher than the minimum set by the Federal government. The US federal minimum wage was set at $7.25 per hour on July 27, 2009. Even though the federal minimum wage has not been updated in a while, many states update their minimum wages much more often.
2023 Minimum Wage by State
Source: U.S. Department of Labor, as of January 1, 2023.
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. There are only five states that have no 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 can be as low as $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.
Salary
This type of compensation is fixed regardless of how much a person works on a given day. A salary is usually set as an annual compensation paid in monthly installments. This type of compensation is usually the most stable, and it is applied to permanent positions that require a consistent working schedule.
Unlike the minimum wage, there is no explicit minimum salary an employer must pay to their employees. On the other hand, there is a set amount of working hours an employee expects to work in a year. The amount an employee is expected to make per hour based on their salary must not be lower than the minimum wage set by the government.
Other Earnings
There can be other ways to earn money including capital gains, dividends, and royalties. These earnings are usually inconsistent and volatile. They are also not considered earned income, so they may be taxed differently from earned income sources. It is difficult to estimate exactly how much income you will receive from these earnings, but you should still try to account for them when calculating annual income.
What Is Earned Income?
This term refers to employment income, which might be hourly wages, salary, tips that you receive, and bonuses. Your earned income is just one part of your annual income. The other earnings included in annual income could be social security, pensions, welfare, child support, capital gains, and rental income. It is best to take into account all of your income sources when determining your annual income.
It is also important to note that some of these earnings may be taxed separately from your income. For example, capital gains can be taxed differently from income if the investment has been held for more than one year. You can use a capital gains tax calculator to estimate your income and taxes on your long-term and short-term investments.
How to Calculate Annual Income
To calculate your annual income, you need to know your hourly wage and the number of hours you work in a week. You can find the number of hours you work in a year by multiplying the number of hours you work in a week by the number of weeks in a year. This estimation can approximate the number of hours you work in a year:
Work Hours Per Year = Work Hours Per Week x 52 (Number of Weeks in a Year)
Once you have the number of hours you work in a year, you can easily calculate your annual income using the following formula:
Annual Income = Work Hours Per Year x Hourly Wage
This calculator allows you to estimate your annual income from hourly wage easily. It also automatically estiamtes the income taxes you will have to pay on your income and the effective tax rate. Lastly, if you get any Paid Time Off (PTO), this calculator can help you find your Adjusted Hourly Wage that only accounts for the days you work.
Examples of Calculating Annual Income
- Employee With Hourly Wage
Let’s say your hourly wage is $15, and you work eight hours daily, from Monday to Friday. With five working days a week, 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.
- Employee With Hourly Wage and Unpaid Time Off
Being paid by the hour means that your annual income is affected by the number of hours 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, their annual income would be $31,200 instead.
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 months.
Their annual income would be $60,000
Minimum Wage Updates
Some states have increased their minimum wage for 2023. 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 most significant minimum wage increase for 2023 is in Nebraska, where the state minimum wage is increasing by $1.50. This brings Nebraska's minimum wage from $9.00 in 2022 to $10.50 in 2023.
2023 Minimum Wage Increases by State
| State | Minimum Wage for 2022 | Minimum Wage for 2023 | Difference |
|---|---|---|---|
| Alaska | $10.34 | $10.85 | $0.51 |
| Arizona | $12.80 | $13.85 | $1.05 |
| California | $15.00 | $15.50 | $0.50 |
| Colorado | $12.56 | $13.65 | $1.09 |
| Delaware | $10.50 | $11.75 | $1.25 |
| District of Columbia | $16.10 | $17.00 | $0.90 |
| Florida | $10.00 | $11.00 | $1.00 |
| Illinois | $12.00 | $13.00 | $1.00 |
| Maine | $12.75 | $13.80 | $1.05 |
| Maryland | $12.50 | $13.25 | $0.75 |
| Massachusetts | $14.25 | $15.00 | $0.75 |
| Michigan | $9.87 | $10.10 | $0.23 |
| Minnesota | $10.33 | $10.59 | $0.26 |
| Missouri | $11.15 | $12.00 | $0.85 |
| Montana | $9.20 | $9.95 | $0.75 |
| Nebraska | $9.00 | $10.50 | $1.50 |
| New Jersey | $13.00 | $14.13 | $1.13 |
| New Mexico | $11.50 | $12.00 | $0.50 |
| New York | $13.20 | $14.20 | $1.00 |
| Ohio | $9.30 | $10.10 | $0.80 |
| Rhode Island | $12.25 | $13.00 | $0.75 |
| South Dakota | $9.95 | $10.80 | $0.85 |
| Vermont | $12.55 | $13.18 | $0.63 |
| Virginia | $11.00 | $12.00 | $1.00 |
| Washington | $14.49 | $15.74 | $1.25 |
Source: LaborLawCenter
Hourly Wage By Industry
Different industries may have very different wages. Understanding what different industries pay may help you decide what job to accept. According to the U.S. Bureau of Labor Statistics, the average hourly earnings of all private-sector employees was $31.82 per hour in December 2022. That's higher than the average hourly earnings of $31.38 in December 2021.
Hourly wages vary considerably based on sector. For example, the average hourly wage of an employee working in retail is $23.42 per hour, while an employee in the financial sector has an average hourly wage of $42.45 per hour. Employees in leisure and hospitality have the lowest average hourly earnings of $20.64 per hour.
Average Hourly Earnings by Industry
| Industry | Average Hourly Wage | ||
|---|---|---|---|
| December 2021 | December 2022 | YoY Change | |
| Total private | $31.38 | $32.82 | 4.59% |
| Goods-producing | $31.69 | $33.10 | 4.45% |
| Mining and logging | $35.66 | $37.31 | 4.63% |
| Construction | $33.62 | $35.57 | 5.80% |
| Manufacturing | $30.35 | $31.44 | 3.59% |
| Durable goods | $31.88 | $32.90 | 3.20% |
| Nondurable goods | $27.79 | $28.93 | 4.10% |
| Private service-providing | $31.31 | $32.76 | 4.63% |
| Trade, transportation, and utilities | $27.00 | $28.21 | 4.48% |
| Wholesale trade | $34.42 | $35.93 | 4.39% |
| Retail trade | $22.50 | $23.42 | 4.09% |
| Transportation and warehousing | $27.36 | $28.37 | 3.69% |
| Utilities | $45.96 | $48.03 | 4.50% |
| Information | $44.96 | $48.03 | 6.83% |
| Financial activities | $40.65 | $42.45 | 4.43% |
| Professional and business services | $37.68 | $39.52 | 4.88% |
| Education and health services | $31.01 | $32.27 | 4.06% |
| Leisure and hospitality | $19.40 | $20.64 | 6.39% |
| Other services | $28.42 | $28.96 | 1.90% |
Working Hours
The average employee works just under 35 hours a week. In December 2022, the average was 34.3 hours per week. Like wages, the number of hours worked also depends on your industry. Employees in mining and logging work for an average of 46.3 hours a week, while those in leisure and hospitality work for an average of 25.3 hours a week.
Average Hours Per Week
| Industry | Average Weekly Hours | |
|---|---|---|
| December 2021 | December 2022 | |
| Total private | 34.8 | 34.3 |
| Goods-producing | 40.1 | 39.7 |
| Mining and logging | 44.9 | 46.3 |
| Construction | 39.2 | 38.5 |
| Manufacturing | 40.4 | 40.1 |
| Durable goods | 40.6 | 40.6 |
| Nondurable goods | 40 | 39.4 |
| Private service-providing | 33.7 | 33.3 |
| Trade, transportation, and utilities | 34.6 | 33.9 |
| Wholesale trade | 39.2 | 38.8 |
| Retail trade | 31.3 | 30 |
| Transportation and warehousing | 38.1 | 38.2 |
| Utilities | 42.5 | 42.3 |
| Information | 36.9 | 36.4 |
| Financial activities | 37.5 | 37.2 |
| Professional and business services | 36.7 | 36.6 |
| Education and health services | 33.4 | 33.2 |
| Leisure and hospitality | 26.1 | 25.3 |
| Other services | 32.3 | 32.3 |
Source: U.S. Bureau of Labor Statistics Table B-2
What Is Overtime?
Overtime is when you work more than a certain number of hours a week. You may be entitled to overtime pay for working more hours, which is usually 1.5x your regular pay. You may be eligible for overtime pay if you work more than 40 hours weekly. 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.
Average Overtime Hours by Industry
| Average Overtime Hours | December 2021 | December 2022 |
|---|---|---|
| Manufacturing | 3.2 | 2.9 |
| Durable goods | 3.2 | 3.1 |
| Nondurable goods | 3.2 | 2.7 |
Paid Time Off
Employers are not required to give employees paid time off, regardless of whether it’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 eight 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 one year. For workers at the same company for more than five years, the average paid vacation days increases to 15 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.