$65,000 a Year Is How Much an Hour?

When considering another job or a pay raise, it’s important to understand how your earning potential stacks up. What may seem like a great annual salary may only translate to $10 an hour after income tax deductions and benefits are factored in, so it’s always good to do the math and find out what you’re making. This will allow you to determine whether your earnings are enough to cover your expenses and save up a little cash.

A yearly income of $65,000 is equivalent to an hourly rate of about $31.25 based on a 40-hour workweek.

$65,000 a Year Is How Much?

To convert an annual salary into an hourly wage, you need to assume there are no benefits like vacation days and sick days. If you work 40 hours per week — or an 8-hour day, five days a week — and earn $65,000 annually, you’re working a total of 2,080 hours during a 52-week calendar year. Here’s a closer look at how those total work hours translate into various pay rates.

How Much Can I Buy With a $65,000 a Year Salary?

It’s important to take a look at the bigger picture when you think about your finances. For example, for every hour worked, you can buy a new car worth $45,000 after working 1,450 hours. You can afford a $10,000 vacation after working 320 hours if you keep your entire gross pay.

What Factors Affect Your Take-Home Pay?

Take-home pay is the amount you get to keep after deductions such as taxes, health care costs, and retirement account contributions. It also excludes any benefits you may receive from your employer, such as health insurance. Here are other factors that affect your take-home pay.

Paid Time Off

When an employee takes paid vacation days, sick days, or personal days, these leaves are considered accrued time off, also known as paid time off, or PTO. Most jobs offer between 10 days to 20 days of PTO per year, but it varies depending on the company and position. If you’re allowed two weeks — or 80 hours — of PTO every year, for example, you’ll be working a total of 2,000 hours annually instead of 2,080. In that case, your hourly rate would increase to $32.50.

Insurance

Insurance is another benefit that can greatly affect your take-home pay. Generally, the more insurance you have, the less money you bring home. For example, if you have family members covered under your employer’s health insurance plan, your take-home pay will be lower than if it only insured you. It’s important to look at your health insurance plan and see how much you’re bringing home after the premiums are deducted. The same goes for life insurance, disability insurance, and any other type of supplemental insurance that may be required by your employer.

Taxes

Taxes are the most important deduction to consider when looking at your take-home pay. The percentage of taxes you pay will vary depending on how much money you make and what tax bracket you fall into. You can find extensive information on tax brackets on the IRS website. You can also use last year’s tax return as a guide to help you estimate how much money will be withdrawn for taxes as long as your income and deductions are relatively the same.

It’s also important to consider your state laws. If you live in a state that has high taxes, you will be paying more than someone who lives in a different state. California, for example, has some of the highest state taxes in the country. By contrast, Florida and Washington are among several states that don’t have their own state income tax.

This article originally appeared on GOBankingRates.com: $65,000 a Year Is How Much an Hour?