What Does $15 Per Hour Annually Equal?

An hourly wage is compensation for each hour worked, distinct from a fixed annual salary. Many hourly workers want to understand their yearly earnings. Converting an hourly rate to an annual figure involves standard assumptions and provides a baseline understanding of potential gross earnings before deductions.

Calculating Annual Income from an Hourly Wage

To determine a baseline annual income from an hourly wage, a common calculation assumes a full-time work schedule. The standard full-time work week in the United States is 40 hours. With 52 weeks in a year, this offers a straightforward method for projecting annual gross earnings.

For instance, at an hourly rate of $15, an individual working 40 hours per week earns $600 weekly ($15/hour 40 hours). Over a full year, the annual gross income would be $31,200 ($600/week 52 weeks). This calculation represents total earnings before any deductions.

Understanding Gross and Net Pay

The annual income calculated from an hourly wage is gross pay, the total amount earned before deductions. Net pay, or take-home pay, is the actual amount an individual receives after mandatory and voluntary withholdings. Mandatory deductions include federal income tax, state income tax (where applicable), and local income taxes (if imposed by a city or county).

Federal Insurance Contributions Act (FICA) taxes are also mandatory deductions, funding Social Security and Medicare. For 2025, employees contribute 6.2% of their wages to Social Security, up to a wage base limit of $176,100, and 1.45% for Medicare, with no wage limit. Beyond these, voluntary deductions can include health insurance premiums, contributions to retirement plans like a 401(k), and other benefits elected by the employee. These deductions collectively reduce the gross annual income to the net amount received.

Other Influences on Annual Earnings

An individual’s actual annual earnings can fluctuate beyond the standard hourly-to-annual conversion and regular deductions due to several factors. Overtime pay, calculated at 1.5 times the regular hourly rate for hours worked over 40 in a workweek, can increase total income. Federal regulations under the Fair Labor Standards Act (FLSA) mandate this premium pay for non-exempt employees.

Bonuses and commissions can augment annual earnings. Bonuses are one-time payments for achieving specific goals, while commissions are performance-based payments, common in sales roles. Both are considered supplemental wages for tax purposes. Conversely, periods of unpaid leave or unemployment can decrease annual income, as wages are not earned during these times.