Neither pays more in general. An hourly job pays for every hour worked and, under federal law, pays time and a half for hours over 40 in a week. A salary pays a fixed amount for the job and, if the position is classified as exempt, pays nothing extra for longer weeks. The hourly job usually comes out ahead when the work routinely runs past 40 hours; the salary usually comes out ahead when hours are steady, benefits are better, and pay does not drop in slow periods.
The practical test is to convert both offers to the same basis: annual pay at the hours the job will actually require, plus the value of benefits.
What the law says about salary and overtime
Under the Fair Labor Standards Act, overtime at 1.5 times the regular rate is owed to non-exempt employees for every hour over 40 in a workweek. Being paid a salary does not by itself make someone exempt. To be exempt as an executive, administrative or professional employee, a worker must pass two tests:
- Salary level: at least $684 a week, or $35,568 a year, paid on a salary basis.
- Duties: the job's primary duties must fit the exemption, such as managing others, exercising independent judgment on significant matters, or professional work requiring advanced knowledge.
The $684 threshold dates from the 2019 rule. The Department of Labor raised it in 2024, to $844 a week and then $1,128, but a federal court in Texas vacated that rule in November 2024, and the 2019 level is the one in force.
States can set higher bars. California requires exempt employees to earn at least twice the state minimum wage for full-time work; with the 2026 minimum of $16.90 an hour, that is $70,304 a year. A salaried employee in California below that line is owed overtime.
A salaried worker who is non-exempt, because the salary is under the threshold or the duties do not qualify, is still owed overtime for hours over 40.
The hourly value of a salary
A salary looks fixed, but its hourly value falls every time the week gets longer. For a $60,000 salary:
| Hours actually worked per week | Effective hourly rate of $60,000 |
|---|---|
| 40 | $28.85 |
| 45 | $25.64 |
| 50 | $23.08 |
| 55 | $20.98 |
| 60 | $19.23 |
At 50 hours a week the salary pays the same per hour as a $23.08 hourly job with no overtime. The salary to hourly guide covers the conversion in more detail, including unpaid weeks.
Comparing a salary with an hourly offer
The fair comparison asks what the hourly job would pay for the same hours, overtime included. Take an hourly rate of $28.85, which equals $60,000 at 40 hours:
| Hours per week, 52 weeks | $60,000 salary (exempt) | $28.85 an hour with overtime | Difference |
|---|---|---|---|
| 40 | $60,000 | $60,000 | $0 |
| 45 | $60,000 | $71,250 | $11,250 |
| 50 | $60,000 | $82,500 | $22,500 |
The overtime rate at $28.85 is $43.28 an hour. Five overtime hours a week is $216.38 a week, or about $11,250 a year. At ten a week it is about $22,500.
Turned around, the question becomes what hourly rate matches a salary at a given workload. If the salaried job really takes 45 hours a week, a $60,000 salary is matched by an hourly rate of about $24.29 with overtime; at 50 hours, about $20.98. An hourly offer above those figures pays more for the same work.
| Salary | Hourly rate that matches it at 45 hrs/week with overtime | At 50 hrs/week |
|---|---|---|
| $50,000 | $20.24 | $17.48 |
| $60,000 | $24.29 | $20.98 |
| $80,000 | $32.39 | $27.97 |
| $100,000 | $40.49 | $34.97 |
Taxes: the overtime deduction
From 2025 through 2028, federal law lets workers deduct the premium portion of qualified overtime pay from taxable income, up to $12,500 a year for a single filer and $25,000 for joint filers. Only the "half" in time and a half counts: for a $28.85 worker, $14.43 of each $43.28 overtime hour. The deduction phases out for single filers with modified adjusted gross income above $150,000. Social Security, Medicare and most state taxes still apply.
Exempt salaried employees receive no FLSA overtime, so the deduction does not help them. For an hourly worker with regular overtime it can be worth from a few hundred dollars up to $2,750 a year in federal tax at the 22% bracket, where the $12,500 cap is reached. In the $45-hour example above, the overtime premium is $3,750 a year, which at the 22% bracket saves $825.
Benefits and paid time off
Benefits are often the larger difference between two offers, and salaried jobs more often carry them, though many hourly jobs do too.
The Bureau of Labor Statistics measures employer spending on benefits. In March 2026, benefits made up 30.1% of total compensation for private industry workers, $14.01 an hour on top of $32.60 in wages. For workers at the median wage level, employers spent $10.63 an hour on benefits, including $2.24 for paid leave and $3.51 for insurance.
Access to paid time off varies with the employer more than with the pay type. BLS found paid sick leave available to 80% of private industry workers and paid holidays to 81% in 2025. The most common paid vacation after one year of service was 10 to 14 days, and paid vacation was available to 91% of workers at establishments with 500 or more employees against 71% at those with fewer than 50.
For an hourly worker without paid time off, every day off is unpaid. Two weeks of vacation and ten holidays unpaid reduce a 2,080-hour year to 1,920 hours, about 8% less pay than the headline annual figure.
Stability
A salaried exempt employee is generally paid the full weekly salary for any week in which they do some work. An hourly worker is paid for the hours scheduled, and in retail, hospitality, warehouse and seasonal work those hours can fall in slow periods. For budgeting, a salary makes monthly income predictable. Hourly pay makes it depend on the schedule.
The trade runs in the other direction in busy periods. An hourly worker's pay rises when the job demands more; a salaried worker's usually does not.
When an employer offers to switch you to salary
A common version of this decision is an hourly employee being offered a move to salary, often with a new title. The offer is easiest to judge by looking back at the past year of pay stubs.
Add up everything the hourly job paid over the last twelve months, including overtime, holiday premiums and shift differentials. Compare that total with the proposed salary. If the salary is lower, the move is a pay cut for the same hours, whatever the title. If it is higher, check how many hours the new role is expected to take: a salary 10% above last year's earnings is a raise at the same hours and a cut if the job adds five hours a week.
It is also worth confirming whether the new role will be exempt. A salary of $684 a week or more with qualifying duties removes overtime entirely. A salaried but non-exempt role keeps it, and the employee should still record hours.
Choosing between them
Salary tends to be the better choice when:
- the job reliably takes close to 40 hours a week;
- the salaried offer includes health coverage, paid leave and retirement contributions the hourly one lacks;
- predictable income matters more than the chance of extra pay.
Hourly tends to be the better choice when:
- the work often runs past 40 hours, especially in busy seasons;
- the hourly rate is at or above the matching rates in the table above;
- the salary is below the exemption line, in which case overtime is owed either way.
Before accepting a salaried role, it is reasonable to ask how many hours the position typically works in a normal week and in the busiest one. That single answer converts the salary into an hourly figure that can be compared directly.
Frequently asked questions
Is it better to be paid hourly or salary? It depends on hours and benefits. At 40 hours with equal benefits the two are the same; at 45 or 50 hours, an hourly job with overtime pays about 19% to 38% more than a salary set at the same 40-hour value.
Can a salaried employee get overtime? Yes, if they are non-exempt. That includes anyone paid less than $684 a week under federal law, or less than $70,304 a year in California, and anyone whose duties do not meet an exemption.
How do I convert a salary to hourly? Divide the annual salary by the hours worked in a year: 2,080 for 40 hours a week. The hourly calculator shows annual pay at other schedules, and the overtime guide covers the rules for extra hours.
Sources
- US Department of Labor, Fair Labor Standards Act overtime and white-collar exemption rules; 2019 salary level of $684 a week.
- US District Court for the Eastern District of Texas, decision vacating the 2024 overtime rule, November 2024.
- California Department of Industrial Relations, 2026 minimum wage of $16.90 an hour.
- IRS guidance on the deduction for qualified overtime compensation, tax years 2025 through 2028.
- Bureau of Labor Statistics, Employer Costs for Employee Compensation, March 2026.
- Bureau of Labor Statistics, National Compensation Survey, paid leave access, 2025.