How to Calculate Gross Pay From Your Hourly Wage (2026)

What Gross Pay Actually Is

Gross pay is the total amount of money you earn for the time you worked, before any taxes or deductions are taken out. According to Indeed’s career guidance, it includes the full amount of your pay prior to withholding.

This is the part people mix up. Your gross pay is not the money that hits your bank account. It is the larger number your paycheck is built from. Out of that gross, your employer subtracts federal income tax, Social Security, Medicare, any state or local tax, and voluntary items like a health plan or 401(k). What remains is your net pay, the take-home figure.

Gross pay vs. net pay in one line

Net Pay = Gross Pay - Taxes - Deductions

So gross pay is the starting point, and net pay is the finish line. When you negotiate a wage or read a job posting, the rate quoted is almost always a gross figure. Learning to build that gross number yourself is the first step to knowing whether your check is right.

Step by Step: Gross Pay for One Workweek

Start with a single workweek. The math is plain arithmetic once you separate regular hours from overtime hours.

Step 1: Count your regular hours

Under the Fair Labor Standards Act, the first 40 hours in a workweek are regular hours. The Department of Labor’s Fact Sheet #23 defines a workweek as a fixed, regularly recurring period of 168 hours: seven consecutive 24-hour periods. It does not have to match the calendar week. Your employer sets it, and it can start on any day.

Step 2: Count your overtime hours

Any hours over 40 in that workweek are overtime, paid at no less than 1.5 times your regular rate under federal law. Some states add a daily rule. California, for example, counts hours over 8 in a single day as overtime even if your week stays under 40. If you work in one of those states, the daily rule can raise your overtime-hour count, which raises your gross.

Step 3: Do the two multiplications

Multiply your regular hours by your rate. Then multiply your overtime hours by 1.5 times your rate. Add the two results.

Worked example

You earn $20/hour and worked 45 hours this workweek.

1. Regular pay: 40 hours x $20 = $800
2. Overtime rate: $20 x 1.5 = $30/hour
3. Overtime pay: 5 hours x $30 = $150
4. Gross pay for the week: $800 + $150 = $950

That $950 is your gross for the week. When bonuses or shift differentials are in play, the base you multiply by for overtime is your full regular rate, not just your hourly wage. Our guide to the regular rate of pay walks through exactly what folds into that number, and the time and a half explainer covers the 1.5x mechanics in more depth.

Scaling It: Per Paycheck and Per Year

One workweek is the building block. A paycheck usually covers more than one, so you compute each workweek and add them up.

Per paycheck

Your pay frequency decides how many workweeks land on one check:

• Weekly: one workweek per check, 52 checks a year.
• Biweekly: two workweeks per check, 26 checks a year.
• Semimonthly: two checks a month on set dates, 24 checks a year. A semimonthly period can split a workweek across two checks, which matters for overtime.

For a biweekly check, figure week one and week two separately, then add. Say week one is the $950 above and week two is a flat 40 hours: 40 x $20 = $800. Your biweekly gross is $950 + $800 = $1,750. Do not lump 85 hours into one pile, because that can hide or distort the overtime split between the two weeks.

Per year

For a steady 40-hour week with no overtime, annual gross is your rate times 2,080 hours (40 hours x 52 weeks). At $20/hour that is $41,600 before taxes. That 2,080 figure is the standard full-time baseline; the actual number of workdays shifts slightly year to year, which we break down in the blog post on how many work hours are in a year.

If your hours bounce around, the 2,080 method is only a rough estimate. For an accurate annual gross, add up the gross from every paycheck across the year. A running log of your hours and pay turns that into a two-minute task instead of a shoebox-of-stubs project. A time-tracking app that records each shift and its rate gives you the raw numbers without the guesswork, and a timecard calculator can total a week for you on the spot.

Where Gross Pay Lands on Your Pay Stub

On a pay stub, gross pay sits near the top, usually right after the hours and rate breakdown. Below it you see the deductions, and at the bottom is net pay. There is also a year-to-date (YTD) gross column that sums your gross across every check so far this year.

The 2026 No Tax on Overtime wrinkle

A common 2026 misconception is that overtime is now tax-free and somehow leaves your gross pay. It does not. Overtime is still part of your gross wages and still reported on your W-2.

What changed is a deduction. The IRS explains in its guidance on qualified overtime compensation that you can deduct the FLSA-required premium portion of your overtime, meaning the extra “half” above your regular rate, on your federal return. In the $950 example, the premium portion is the $50 above straight time (5 overtime hours x $10), not the full $150 of overtime pay.

The deduction runs for tax years 2025 through 2028, caps at $12,500 for single filers and $25,000 for joint filers, and phases out once modified adjusted gross income passes $150,000 ($300,000 joint). Starting with 2026, your W-2 reports that qualified overtime separately so you can claim it. We cover the details in our no tax on overtime guide. The short version: it lowers your taxable income, not your gross pay.

Common Mistakes That Throw Off Your Gross Pay

If your hand calculation and your stub disagree, one of these is usually why.

Forgetting to subtract unpaid breaks

An unpaid 30-minute lunch each day removes 2.5 hours from a 5-day week. Worked hours, and therefore gross, drop accordingly. Short rest breaks under 20 minutes are paid under federal rules and stay in your total.

Using your base wage as the overtime base

If you earn a non-discretionary bonus or a shift differential, your overtime should be 1.5 times your regular rate, which is higher than your base hourly wage. Multiplying by the base wage alone shorts your overtime and your gross.

Mixing workweeks together

Overtime is calculated per workweek, not per pay period. Adding two weeks of hours into one pile can erase overtime that one week actually earned. Keep the weeks separate.

Ignoring time-clock rounding

Some employers round punches to the nearest quarter hour. Over a period, rounding can nudge your total hours up or down by a few minutes, which slightly changes gross. Your own time log is the check against that.

Two pay rates in the same week

If you work two roles for the same employer at different rates in one workweek, overtime uses a weighted average of those rates, not either rate by itself. The regular rate guide shows the weighted-average math.

Frequently Asked Questions

How do you calculate gross pay for an hourly employee?

Multiply your regular hours by your hourly rate, then add your overtime hours multiplied by 1.5 times that rate. For one workweek at $20/hour with 40 regular hours and 5 overtime hours, that is 40 x $20 = $800, plus 5 x $30 = $150, for $950 in gross pay. Sum every workweek in the pay period to get the gross for that paycheck.

Is overtime included in gross pay?

Yes. Gross pay is everything you earn before deductions, and that includes your overtime premium. The 2026 No Tax on Overtime deduction does not change this. Your overtime still shows up in gross pay; the deduction is a separate line you claim at tax time on the half portion of your overtime, not money that disappears from your gross.

What is the difference between gross pay and net pay?

Gross pay is the total you earn before anything comes out. Net pay is what actually lands in your bank account after taxes and deductions. Net pay equals gross pay minus federal income tax, Social Security and Medicare, state and local taxes, and any voluntary deductions like health insurance or retirement contributions.

How do I calculate my annual gross pay from an hourly wage?

For a steady 40-hour week with no overtime, multiply your hourly rate by 2,080, which is 40 hours times 52 weeks. At $20/hour that is $41,600 a year before taxes. If your hours swing week to week, this is only an estimate; add up your actual gross from each paycheck across the year for the real figure.

Does the 2026 no-tax-on-overtime rule mean overtime isn’t part of my gross pay?

No. Your overtime is still part of gross pay and still reported as wages. The rule, added by the One Big Beautiful Bill Act, lets you deduct the FLSA-required premium portion (the extra half above your regular rate) on your federal return for tax years 2025 through 2028, up to $12,500 single or $25,000 joint, with a phaseout once your modified adjusted gross income passes $150,000 ($300,000 joint).

How do unpaid breaks affect my gross pay?

Unpaid meal breaks are subtracted from your worked hours before pay is calculated, so they lower your gross. A 30-minute unpaid lunch each day across a 5-day week removes 2.5 hours from your total. Short rest breaks, usually under 20 minutes, are paid and stay in your hours under federal rules.

Why is the gross pay on my stub different from hours times my rate?

A few things can cause a gap: unpaid breaks deducted from your hours, overtime figured on a regular rate that includes bonuses or shift differentials rather than your base wage, time-clock rounding, or a pay period that splits a workweek across two checks. Recompute each workweek separately and check whether your overtime base is your full regular rate.