Annualized salary is pay for a period shorter than a year, or an hourly rate, converted into what it would equal over a full year. It is used to compare offers, check thresholds and estimate taxes.
| Starting point | Formula | Example |
|---|---|---|
| Hourly rate, full-time | Rate x 2,080 | $20 x 2,080 = $41,600 |
| Hourly rate, part-time | Rate x weekly hours x 52 | $20 x 25 x 52 = $26,000 |
| Partial-year earnings | Earnings / months worked x 12 | $12,000 / 4 x 12 = $36,000 |
| Weekly salary | Weekly x 52 | $684 x 52 = $35,568 |
Use the hourly to salary calculator for quick conversions.
A dispatcher started on September 1 and earned $12,000 by December 31. Her annualized salary is $12,000 / 4 months x 12 = $36,000.
To total hours with breaks and overtime, use our time card calculator.
In January, the company considers moving her to a salaried, exempt role at $36,000. HR checks the weekly test: $36,000 / 52 = about $692 a week, just above the $684 federal level. But the role’s duties need to pass the duties test too, and the state where she works has a higher salary level than the federal one.
Because the state level is higher, the company keeps her non-exempt and hourly at an equivalent rate, $36,000 / 2,080 = about $17.31 an hour, with overtime for hours over 40. The annualized number made the comparison easy, but the weekly and state tests decided the classification.
For employees whose hours change week to week, multiplying the rate by 2,080 overstates their pay. A better method is to take actual earnings over a recent period and scale them. For example, 26 weeks of pay totaling $15,600 annualizes to $31,200 (15,600 divided by 26, times 52).
Pick the lookback period on purpose. A 13-week period reacts quickly to change but can catch a seasonal peak or a slow month; a 52-week period is steadier but slow to reflect a raise. Whatever you use, apply the same method to everyone in the same situation, and write it down if the figure decides eligibility for anything, such as a benefit or a bonus.
A retailer offers a benefit to employees whose annualized pay is at least $25,000. A part-time associate earns $16 an hour and averaged 29 hours a week over the last 26 weeks.
Her annualized pay is 16 times 29 times 52, or $24,128, just under the line. Using the 2,080 shortcut would have shown $33,280 and wrongly made her eligible. When her average rises to 31 hours the next quarter, her annualized pay is $25,792 and she qualifies.
Scale pay to 12 months: hourly rate x hours per week x 52, or partial-year earnings / months worked x 12.
$41,600 for a full-time schedule of 2,080 hours.
The DOL standard level of $684 per week annualizes to $35,568. Some states set higher levels.
To compare offers, estimate benefits and taxes, and check salary thresholds.
It depends on the purpose. For comparing base pay, leave overtime out. For estimating actual yearly earnings, include it, and say which method you used.
Multiply the biweekly pay by 26, the number of biweekly pay periods in most years.
EZTime turns clock-ins and approved corrections into signed monthly reports you can export to PDF or Excel for payroll.