How Much Does $15 an Hour Make a Year?

Understanding how an hourly rate translates into a yearly salary is an important step for personal financial planning and budgeting. This conversion provides a foundational figure for comprehending one’s overall financial picture.

Calculating Annual Gross Income

To determine the annual gross income from an hourly wage, multiply the hourly rate by the typical number of hours worked in a week, and then by the number of weeks in a year. A common full-time work schedule in the United States consists of 40 hours per week over 52 weeks per year. This results in 2,080 working hours annually. For an individual earning $15 per hour, the basic annual gross income would be $31,200. This figure represents the income before any taxes or other deductions are applied.

Factors Influencing Total Gross Income

While the 40-hour workweek provides a baseline, several factors can influence an individual’s total annual gross income. Working more than 40 hours in a workweek can lead to overtime pay, which is calculated at one and a half times the regular hourly rate for non-exempt employees under the Fair Labor Standards Act (FLSA). This additional pay significantly increases overall earnings beyond the standard calculation. Paid time off, such as vacation days, sick leave, or holidays, also contributes to the annual income even when an individual is not actively working.

Additional forms of compensation like performance bonuses, sales commissions, or shift differentials for working undesirable hours (e.g., nights or weekends) can further supplement the base hourly wage. These payments, while not part of the regular hourly rate, are often included when calculating an employee’s total gross income for the year. Conversely, periods of unpaid leave or a reduction in regular working hours can decrease the total annual gross earnings.

Understanding Net Income

The amount an individual actually receives in their paycheck, known as net income or take-home pay, is significantly less than their gross income due to various mandatory and voluntary deductions. Federal income tax is a primary deduction, with the amount withheld depending on an individual’s income level and filing status. This system involves progressive tax rates, meaning higher income levels are taxed at higher percentages.

State and local income taxes also reduce gross pay, though their application varies across the United States. Many states levy an income tax, which can be structured as a flat rate or a graduated (progressive) rate, while some states impose no income tax. Additionally, certain local governments may impose their own income taxes, further impacting take-home pay.

Federal Insurance Contributions Act (FICA) taxes are another mandatory deduction that fund Social Security and Medicare programs. For employees, the Social Security tax rate is 6.2% of earnings, up to an annual wage base limit, which is $176,100 for 2025. The Medicare tax rate is 1.45% of all earnings, with no wage cap. Beyond these mandatory withholdings, employees may have voluntary deductions for benefits like health insurance premiums, contributions to retirement accounts such as 401(k)s, or union dues. These deductions reduce the gross income to the net amount received.