Annual Income Calculator: Gross and Net Income
What You Should Know
- This annual income calculator can estimate your gross and net annual income and see how much federal and state taxes you pay on your income.
- To determine your annual income, you should add up your hourly wage, your salary, and any other earnings you may receive over the year.
- Depending on the state you live in, your annual net income may vary because different states levy different income tax rates with different tax brackets.
- The US federal minimum wage of $7.25 is equal to $15,080.00 in gross salary, which is not enough to live in most states, so many states have laws that enforce a higher minimum wage.
How to Use the Annual Income Calculator
This calculator is easy to use and requires a few simple inputs. It helps you estimate your gross and net annual income as well as the state and federal taxes you have to pay on your income.
- You can choose between calculating based on your hourly wage or your salary. This allows you to use the calculator easily regardless of how your income is calculated.
- State: Pick the state you work in. This helps the calculator accurately estimate the state income tax you have to pay, and it helps accurately determine your net income tax.
- Filing Status: Pick your filing status to ensure that the calculator uses the correct standard deduction and tax brackets for your net income calculation.
- Hourly Wage/Annual Salary: Input the wage or the salary that is written in your employment contract. This is the main point to calculate your gross annual income, determine your tax bracket and accurately estimate your net income.
- Hours Per Week: The number of hours you work per week helps estimate how many hours you work in a year. The number of hours you work in a year helps calculate your annual salary if your income is based on hourly wage. If your income is based on annual salary, it helps calculate your hourly wage.
- Annual PTO: Everyone gets some days off. The more PTO you get, the higher your adjusted annual income may be. Our calculator subtracts PTO days from the annual hours worked. If you do not want to account for PTO in the calculations, you should keep it at 0.
What Is Annual Income
Annual income refers to the amount of money you earn in a single year. Different types of income may not be stable enough to account for daily or monthly, so calculating your annual income helps capture the inconsistent earnings. There are different income streams that should be considered when calculating your annual income.
Summary of Income Streams
| Category | Hourly Wage | Annual Salary | Capital Earnings |
|---|---|---|---|
| Type of Income | Earned Income | Earned Income | Investment Income |
| Income Stability | Relatively Stable | Very Stable | Not Stable |
| Applied Tax | Income Tax | Income Tax | Income Tax/Capital Gains |
| Common Jobs | Part-Time, Low-Wage Jobs | Full-time, Permanent Jobs | N/A Possible Royalties from Past Work |
It is a good practice to estimate your annual income to account for unstable earnings and upcoming expenses. You may also need to know your annual income when applying for a loan or calculating your mortgage amount.
Hourly Wage
Hourly wage is a standard compensation structure where an employer pays an employee for each hour of work they do. The daily earnings differ depending on the hours an employee works during the day. Hourly wage compensation structure is often applied to low-skill jobs with a high turnover rate and seasonal jobs that do not have consistent working hours. This Annual Income Calculator helps you convert your hourly wage to an annual salary using your wage and the number of hours you work weekly.
The minimum wage set by the US Government is $7.25, and it has been effective since July 27, 2009. This minimum wage applies to most of the jobs in the US according to the Fair Labor Standards Act Some states have set their own minimum wage that is higher than the minimum set by the Federal government. Even though the federal minimum wage has not been updated in a while, many states update their minimum wages much more often.
2024 Minimum Wage by State
*States (AL, GA, LA, MS, SC, TN, WY, AS) have no minimum wage or minimum wage lower than $7.25 for employers not covered by Fair Labor Standards Act.
Source: US Department of Labor, July 1, 2024.
33 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 8 states that have no minimum wage or have a minimum wage lower than the Federal minimum wage. The lower minimum wage only applies to jobs not covered by the Fair Labor Standards Act. This includes jobs that receive tips, such as being a waiter or waitress, and they 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. According to Wyoming's labor and employment laws, you are considered to be a tipped employee in Wyoming if you regularly receive more than $30 a month in tips.
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 applies to permanent positions that require a consistent working schedule.
There is no explicit minimum salary an employer must pay to their employees, but the hourly rate must still be equal to or larger than the minimum wage based on the official number of hours the employee must work.
Other Earnings
There are 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 often difficult to estimate how much income you will receive from these earnings, so it should not be explicitly accounted for in your 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
Annual Income and 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 $35.07 per hour in July 2024.
Hourly wages vary considerably based on sector. For example, the average hourly wage of an employee working in retail is $24.42 per hour, while an employee in the financial sector has an average hourly wage of $45.58 per hour. Employees in leisure and hospitality have the lowest average hourly earnings of $22.12 per hour.
Average Hourly Earnings, Hours per Week, and Annual Incomes by Industry
| Industry | Hourly Earnings | Hours per Week | Annual Income |
|---|---|---|---|
| Utilities | $50.89 | 42.2 | $111,673.02 |
| Information | $49.95 | 36.6 | $95,064.84 |
| Financial activities | $45.58 | 37.4 | $88,643.98 |
| Professional and business services | $42.29 | 36.4 | $80,046.51 |
| Mining and logging | $39.68 | 44.3 | $91,406.85 |
| Construction | $38.26 | 38.8 | $77,193.38 |
| Wholesale trade | $37.81 | 39.1 | $76,875.29 |
| Private education and health services | $34.26 | 33 | $58,790.16 |
| Manufacturing | $34.06 | 39.9 | $70,667.69 |
| Other services | $31.61 | 32.3 | $53,092.16 |
| Transportation and warehousing | $30.68 | 38.2 | $60,942.75 |
| Retail trade | $24.42 | 29.8 | $37,841.23 |
| Leisure and hospitality | $22.12 | 25.3 | $29,101.07 |
- Any analysis or commentary reflects the opinions of Casaplorer.com (a part of Wowa Leads Inc.) analysts and should not be considered financial advice. Please consult a licensed professional before making any decisions.
- The calculators and content on this page are for general information only. Casaplorer does not guarantee the accuracy and is not responsible for any consequences of using the calculator.
- Interest rates are sourced from financial institutions' websites.