The number that settles it: the break-even hourly wage
A salary pays the same for 40 hours or 50, unless the job isn’t exempt and owes overtime. An hourly wage pays for every hour, and for covered employees who aren’t exempt, federal law adds at least half the rate again for each hour over 40 in a workweek. So the more hours a job really takes, the lower the hourly wage that matches a salary.
The break-even wage is the hourly rate that pays the same in a year as the salary, for the same hours and the same paid weeks. Above it, the hourly job pays more; below it, the salary does.
| Salary | 40 hours | 45 hours | 50 hours | 45 hours, no overtime |
|---|---|---|---|---|
| $50,000 | $24.04 | $20.24 | $17.48 | $21.37 |
| $60,000 | $28.85 | $24.29 | $20.98 | $25.64 |
| $75,000 | $36.06 | $30.36 | $26.22 | $32.05 |
Break-even wage = salary ÷ (52 × (hours + half the hours over 40)). A 45-hour week with overtime counts as 47.5 paid hours; a 50-hour week as 55.
The last column is for hourly jobs that pay straight time only: salary ÷ (45 × 52).
Reference: U.S. Department of Labor: Overtime Pay
What federal law guarantees either way
Overtime depends on exemption, not on how pay is quoted. The Department of Labor says covered employees must get at least time and a half for hours over 40 in a workweek unless they’re exempt, and each workweek stands on its own: hours can’t be averaged over two or more weeks.
To be exempt as an executive, administrative or professional employee, an employee generally must be paid on a salary basis of at least $684 a week ($35,568 a year) and meet tests about their job duties; job titles don’t decide it. So a salaried job can still owe overtime, and a salary above $684 a week doesn’t by itself make a job exempt. Some hourly workers can be exempt too: DOL’s earnings thresholds include $27.63 an hour for computer employees paid on an hourly basis.
Covered employees must also be paid at least the federal minimum wage of $7.25 an hour. Many states also have minimum wage laws, and employers must comply with both.
Neither kind of pay comes with paid time off under federal law. The Fair Labor Standards Act doesn’t require payment for time not worked, such as vacations, sick leave or holidays; federal law leaves it to agreement between employer and employee, and state law can differ.
Reference: U.S. Department of Labor: Overtime Pay · U.S. Department of Labor: Earnings thresholds for the EAP exemption · U.S. Department of Labor: Fact Sheet #17A · U.S. Department of Labor: Minimum Wage · U.S. Department of Labor: Vacation Leave
A worked comparison: two example offers
Offer A is a $60,000 salary for about 45 hours a week, with 3 paid weeks off. Offer B pays $26 an hour for 45 scheduled hours with time and a half over 40, but has 2 unpaid weeks a year. Both are examples.
At 45 hours, Offer B pays $61,750 a year, $1,750 more than Offer A, and slightly more per hour actually worked. If Offer B’s schedule drops to 40 hours, it pays $52,000, $8,000 less than the salary. The hourly job’s pay follows its hours; the salary doesn’t.
| Offer | Paid weeks | Weeks worked | Per year | Per hour worked |
|---|---|---|---|---|
| A: $60,000 salary, 45 hours, 3 paid weeks off | 52 | 49 | $60,000.00 | $27.21 |
| B: $26 an hour, 45 hours, overtime | 50 | 50 | $61,750.00 | $27.44 |
| B at 40 hours | 50 | 50 | $52,000.00 | $26.00 |
Per hour worked = yearly pay ÷ (hours a week × weeks worked). Benefits such as health insurance and retirement contributions aren’t included; compare them separately.
Steady pay, hours cuts and taxes
An hourly paycheck follows the hours on the schedule. If hours are cut, pay falls with them, as Offer B at 40 hours shows; if they rise, pay rises, with overtime for covered, non-exempt employees. A salary is a set amount for each pay period, so it doesn’t move with the week’s hours.
Hours can also decide benefits. For the Affordable Care Act’s employer shared responsibility provisions, the IRS counts an employee as full time who averages at least 30 hours of service a week or 130 hours a month. Other benefits can have hour rules of their own; ask what applies before you accept fewer hours.
Are you taxed more on salary or hourly pay? Not because of the pay type alone. For federal employment taxes, the IRS says wages include all pay for services, including salaries, and that it doesn’t matter how the pay is measured or paid. So the same wages are treated the same way whether they’re quoted by the hour or the year, with one exception for overtime in federal income tax.
The exception: for tax years 2025 through 2028, the IRS says people who receive qualified overtime compensation, meaning overtime the Fair Labor Standards Act requires, may deduct the part above their regular rate, generally the “half” of time and a half. The deduction is capped at $12,500 a year ($25,000 filing jointly) and phases out above $150,000 of modified adjusted gross income ($300,000 jointly). Other conditions apply, such as a valid Social Security number and, if you’re married, filing jointly; the IRS page lists them. So an hourly job that pays federal overtime and a salary with the same gross pay can owe different federal income tax. This guide doesn’t estimate any tax.
See how many hours a year a schedule really has ↗
Reference: IRS: Identifying full-time employees · IRS: Publication 15 (2026), Employer’s Tax Guide, section 5 · IRS: What to know about the No Tax on Overtime deduction · IRS: Treasury, IRS issue FAQs on the deduction for qualified overtime compensation (IR-2026-10)
Before you choose
Put each offer through the calculator with the same weekly hours, and compare the yearly pay and the pay per hour actually worked.
See what a $60,000 salary pays per hour worked ↗
Check whether a raise is worth a longer commute ↗
- The hours each job really takes in a typical week, not the hours in the ad.
- Whether the hourly job pays time and a half over 40, and how often overtime is actually offered.
- How many weeks each job pays for, including paid holidays and vacation.
- Whether the salaried job is classified exempt. Ask; job titles don’t decide it.
- Benefits and costs the pay rate leaves out, such as health insurance, retirement contributions and the commute.
Use the calculator with your numbers
The example below is Offer B from the comparison above, calculated with the salary to hourly calculator’s engine. Enter each of your offers the same way.
| Item | Example result |
|---|---|
| Straight time: 45 × $26 | $1,170.00 |
| Overtime premium: 5 × $26 × 0.5 | $65.00 |
| Each paid week | $1,235.00 |
| Per year: each paid week × 50 | $61,750.00 |
| Per hour worked: per year ÷ (45 × 50) | $27.44 |
An example offer, not an average wage. Before tax; benefits not included.
Illustrative figures, not market averages. The underlying costs are calculated with the same engine as the tool; additional derived measures are labeled.
Compare my two offers ↗About this guide
Prepared by RealCostTools with AI-assisted research and drafting. Sources and calculations were checked October 4, 2026. Every salary, wage and schedule is an example, not an average for any job or place. This guide describes federal rules only and isn’t legal advice about any job.
Sources and calculation notes
- U.S. Department of Labor: Overtime Pay
Unless exempt, covered employees get at least time and a half for hours over 40 in a workweek; hours can’t be averaged over two or more weeks; checked October 4, 2026. Federal rule only.
- U.S. Department of Labor: Earnings thresholds for the EAP exemption
Standard salary level $684 a week ($35,568 a year); computer employees paid hourly, $27.63 an hour; checked October 4, 2026.
- U.S. Department of Labor: Fact Sheet #17A
Revised September 2019. Exemption generally requires job-duties tests and a salary basis of at least $684 a week; job titles don’t determine exempt status; checked October 4, 2026.
- U.S. Department of Labor: Vacation Leave
The FLSA doesn’t require payment for time not worked, such as vacations, sick leave or holidays; checked October 4, 2026.
- U.S. Department of Labor: Minimum Wage
Federal minimum wage $7.25 an hour since July 24, 2009; many states have their own; checked October 4, 2026.
- IRS: Identifying full-time employees
For the ACA employer shared responsibility provisions, a full-time employee averages at least 30 hours of service a week or 130 hours a month; page updated September 14, 2026, checked October 4, 2026. That rule only.
- IRS: Publication 15 (2026), Employer’s Tax Guide, section 5
“Wages subject to federal employment taxes generally include all pay you give to an employee for services performed … It includes salaries … It doesn’t matter how you measure or make the payments.” Checked October 4, 2026. Says nothing about any person’s tax bill.
- IRS: What to know about the No Tax on Overtime deduction
If you receive qualified overtime compensation, you may deduct the pay that exceeds your regular rate; maximum $12,500 a year ($25,000 filing jointly); phases out above $150,000 of modified adjusted gross income ($300,000 jointly); page updated September 10, 2026, checked October 4, 2026. Not a tax estimate.
- IRS: Treasury, IRS issue FAQs on the deduction for qualified overtime compensation (IR-2026-10)
For tax years 2025 through 2028, the amount above the regular rate (generally the “half” of time and a half) may be deducted; checked October 4, 2026.
- RealCostTools: salary to hourly methodology
The formulas behind every amount in this guide, including federal overtime week by week.
Read the salary to hourly methodology for the model assumptions and excluded costs.
Published . Sources checked . Editorial policy · Corrections