$7.25 an Hour is How Much a Year?
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Summary:
A $7.25 an hour rate equals a gross annual income of approximately $15,080 if you work a 40-hour week for 52 weeks a year. Remember that taxes, where you live, and the number of hours you work will affect the exact take-home dollar amount.
Determining yearly salary from your hourly wage can be a bit deceptive. It’s easy to forget that our gross income won’t be anywhere near our take-home pay (at least after income tax is applied).
You also have to remember that salary is a technical term. Salaried employees are typically exempt from certain employment situations and restrictions that will explicitly apply to employees whose pay is calculated hourly.
So how big is your gross annual salary if you make the federal minimum wage of $7.25 an hour? What do you actually get to take home from that salary? In this article, we dive deep into hourly-to-salary calculations, how federal and state taxes vary depending on your wage, and what you can do to make the most of your take-home pay.
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$7.25 an hour is how much a year?
The simple answer is that $7.25 an hour is about $15,080 per year in pretax dollars. This assumes that you work 40 hours a week, every week. If they are strict 40-hour weeks, the total amount may be about a few thousand dollars shy of this number (as we explain in further detail below).
$7.25 an hour is how much a month?
With an hourly rate of $7.25 an hour, your monthly salary would be about $1,256.67. Of course, the exact number depends on the number of days in that month.
$7.25 an hour is how much a week?
An hourly rate of $7.25 translates into $290 a week if you work 40 hours a week.
| Timeframe | Pretax income |
|---|---|
| Hourly | $7.25 |
| Daily (8 hours) | $58 |
| Weekly (40 hours) | $290 |
| Biweekly (80 hours) | $580 |
| Monthly (173.33 hours) | $1,256.67 |
| Yearly (52 weeks/2,080 hours) | $15,080 |
However, these calculations only show what you would take home without paying any taxes. Once you figure taxes into the equations, a short answer becomes a bit longer.
40 hours a week, or 37.5?
Even when you work 40 hours a week, your hourly pay may not reflect that. Another easily overlooked factor when calculating the hours a week you will be paid for is meal breaks. There is no federal law that mandates employers provide employees with a meal break.
In states where hourly employees are entitled to meal periods, those meal periods are generally unpaid. So if an hourly employee is working 40 hours a week but gets a 30-minute meal break every 8-hour shift, then they have probably only worked 37.5 hours that week.
The federal minimum wage
Though minimum wage varies by state, as of 2022 federal law dictates minimum wage should never be less than an hourly pay rate of $7.25 an hour. Unfortunately, that number hasn’t changed since 2009, but that hasn’t stopped inflation. An inflation calculator designed by the U.S. Bureau of Labor Statistics (BLS) reveals that the minimum wage should be at least $10.17 to match inflation rates in 2022.
However, many states have chosen to enact higher minimum wage laws, as you can see from the chart below. Individual county and city governments may also decide to increase the minimum wage on a more local level, so you may want to review your county’s hourly wage requirements before applying for a position.
How does this compare to other hourly wages?
According to the BLS, the average annual salary in May 2021 was $58,260, or approximately $28 per hour, before any taxes were removed. With inflation hitting a new high May 2022, this average is likely lower than 2022 average salaries.
To see how your hourly wage compares to other salaries, check the table below.
| Hourly wage | Gross weekly income | Gross monthly income | Gross annual income |
|---|---|---|---|
| $5 | $200.00 | $866.67 | $10,400.00 |
| $7.25 | $290.00 | $1,256.67 | $15,080.00 |
| $8.00 | $320.00 | $1,386.67 | $16,640.00 |
| $9.00 | $360.00 | $1,560.00 | $18,720.00 |
| $10.00 | $400.00 | $1,733.33 | $20,800.00 |
| $11.00 | $440.00 | $1,906.67 | $22,880.00 |
| $12.00 | $480.00 | $2,080.00 | $24,960.00 |
| $13.00 | $520.00 | $2,253.33 | $27,040.00 |
| $14.00 | $560.00 | $2,426.67 | $29,120.00 |
| $15.00 | $600.00 | $2,600.00 | $31,200.00 |
| $16.00 | $640.00 | $2,773.33 | $33,280.00 |
| $17.00 | $680.00 | $2,946.67 | $35,360.00 |
| $18.00 | $720.00 | $3,120.00 | $37,440.00 |
| $19.00 | $760.00 | $3,293.33 | $39,520.00 |
| $20.00 | $800.00 | $3,466.67 | $41,600.00 |
| $21.00 | $840.00 | $3,640.00 | $43,680.00 |
| $22.00 | $880.00 | $3,813.33 | $45,760.00 |
| $23.00 | $920.00 | $3,986.67 | $47,840.00 |
| $24.00 | $960.00 | $4,160.00 | $49,920.00 |
| $25.00 | $1,000.00 | $4,333.33 | $52,000.00 |
| $26.00 | $1,040.00 | $4,506.67 | $54,080.00 |
| $27.00 | $1,080.00 | $4,680.00 | $56,160.00 |
| $28.00 | $1,120.00 | $4,853.33 | $58,240.00 |
| $29.00 | $1,160.00 | $5,026.67 | $60,320.00 |
| $30.00 | $1,200.00 | $5,200.00 | $62,400.00 |
| $31.00 | $1,240.00 | $5,373.33 | $64,480.00 |
| $32.00 | $1,280.00 | $5,546.67 | $66,560.00 |
| $33.00 | $1,320.00 | $5,720.00 | $68,640.00 |
| $34.00 | $1,360.00 | $5,893.33 | $70,720.00 |
| $35.00 | $1,400.00 | $6,066.67 | $72,800.00 |
| $36.00 | $1,440.00 | $6,240.00 | $74,880.00 |
| $37.00 | $1,480.00 | $6,413.33 | $76,960.00 |
| $38.00 | $1,520.00 | $6,586.67 | $79,040.00 |
| $39.00 | $1,560.00 | $6,760.00 | $81,120.00 |
| $40.00 | $1,600.00 | $6,933.33 | $83,200.00 |
| $41.00 | $1,640.00 | $7,106.67 | $85,280.00 |
| $42.00 | $1,680.00 | $7,280.00 | $87,360.00 |
| $43.00 | $1,720.00 | $7,453.33 | $89,440.00 |
| $44.00 | $1,760.00 | $7,626.67 | $91,520.00 |
| $45.00 | $1,800.00 | $7,800.00 | $93,600.00 |
| $46.00 | $1,840.00 | $7,973.33 | $95,680.00 |
| $47.00 | $1,880.00 | $8,146.67 | $97,760.00 |
| $48.00 | $1,920.00 | $8,320.00 | $99,840.00 |
| $49.00 | $1,960.00 | $8,493.33 | $101,920.00 |
| $50.00 | $2,000.00 | $8,666.67 | $104,000.00 |
| $51.00 | $2,040.00 | $8,840.00 | $106,080.00 |
| $52.00 | $2,080.00 | $9,013.33 | $108,160.00 |
| $53.00 | $2,120.00 | $9,186.67 | $110,240.00 |
| $54.00 | $2,160.00 | $9,360.00 | $112,320.00 |
| $55.00 | $2,200.00 | $9,533.33 | $114,400.00 |
| $56.00 | $2,240.00 | $9,706.67 | $116,480.00 |
| $57.00 | $2,280.00 | $9,880.00 | $118,560.00 |
| $58.00 | $2,320.00 | $10,053.33 | $120,640.00 |
| $59.00 | $2,360.00 | $10,226.67 | $122,720.00 |
| $60.00 | $2,400.00 | $10,400.00 | $124,800.00 |
| $61.00 | $2,440.00 | $10,573.33 | $126,880.00 |
| $62.00 | $2,480.00 | $10,746.67 | $128,960.00 |
| $63.00 | $2,520.00 | $10,920.00 | $131,040.00 |
| $64.00 | $2,560.00 | $11,093.33 | $133,120.00 |
| $65.00 | $2,600.00 | $11,266.67 | $135,200.00 |
| $66.00 | $2,640.00 | $11,440.00 | $137,280.00 |
| $67.00 | $2,680.00 | $11,613.33 | $139,360.00 |
| $68.00 | $2,720.00 | $11,786.67 | $141,440.00 |
| $69.00 | $2,760.00 | $11,960.00 | $143,520.00 |
| $70.00 | $2,800.00 | $12,133.33 | $145,600.00 |
| $71.00 | $2,840.00 | $12,306.67 | $147,680.00 |
| $72.00 | $2,880.00 | $12,480.00 | $149,760.00 |
| $73.00 | $2,920.00 | $12,653.33 | $151,840.00 |
| $74.00 | $2,960.00 | $12,826.67 | $153,920.00 |
| $75.00 | $3,000.00 | $13,000.00 | $156,000.00 |
| $76.00 | $3,040.00 | $13,173.33 | $158,080.00 |
| $77.00 | $3,080.00 | $13,346.67 | $160,160.00 |
| $78.00 | $3,120.00 | $13,520.00 | $162,240.00 |
| $79.00 | $3,160.00 | $13,693.33 | $164,320.00 |
| $80.00 | $3,200.00 | $13,866.67 | $166,400.00 |
| $81.00 | $3,240.00 | $14,040.00 | $168,480.00 |
| $82.00 | $3,280.00 | $14,213.33 | $170,560.00 |
| $83.00 | $3,320.00 | $14,386.67 | $172,640.00 |
| $84.00 | $3,360.00 | $14,560.00 | $174,720.00 |
| $85.00 | $3,400.00 | $14,733.33 | $176,800.00 |
| $86.00 | $3,440.00 | $14,906.67 | $178,880.00 |
| $87.00 | $3,480.00 | $15,080.00 | $180,960.00 |
| $88.00 | $3,520.00 | $15,253.33 | $183,040.00 |
| $89.00 | $3,560.00 | $15,426.67 | $185,120.00 |
| $90.00 | $3,600.00 | $15,600.00 | $187,200.00 |
| $91.00 | $3,640.00 | $15,773.33 | $189,280.00 |
| $92.00 | $3,680.00 | $15,946.67 | $191,360.00 |
| $93.00 | $3,720.00 | $16,120.00 | $193,440.00 |
| $94.00 | $3,760.00 | $16,293.33 | $195,520.00 |
| $95.00 | $3,800.00 | $16,466.67 | $197,600.00 |
| $96.00 | $3,840.00 | $16,640.00 | $199,680.00 |
| $97.00 | $3,880.00 | $16,813.33 | $201,760.00 |
| $98.00 | $3,920.00 | $16,986.67 | $203,840.00 |
| $99.00 | $3,960.00 | $17,160.00 | $205,920.00 |
| $100.00 | $4,000.00 | $17,333.33 | $208,000.00 |
Don’t forget about overtime
Your effective hourly wage might be $7.25 an hour, but this doesn’t take into account the additional pay you may receive from overtime. If you work regular overtime hours each week, you can probably expect to receive overtime pay unless you are an exempt employee, which generally means you are salaried.
According to the Fair Labor Standards Act (FLSA), non-exempt employees are entitled to overtime pay. This means they need to be paid at 1.5 times their normal rate for any hours worked over 40 hours a week. This only applies to hours worked, so a lunch break will likely not count towards the total hour calculations.
Example:
Let’s say you worked 40 hours Monday through Friday. Each of the shifts you worked included a 30-minute meal break, meaning you worked 37.5 hours for the purposes of your paycheck.
You pick up an extra full shift (eight hours) on Saturday with another 30-minute meal break. That would bring your total hours worked to 45, meaning you would get five hours of overtime pay.
Pro Tip
However, if you find yourself working regular overtime, double-check that you are being compensated appropriately. Though it may not seem like much, the temporary increase in hourly wages from overtime is essentially a temporary pay raise.
Income tax variations and take-home pay
Your take-home pay will vary depending on several factors, but your income tax is one of the big ones. How much you pay in taxes will vary depending on where you live and how much you earn. Taxes can be a bit complicated, but there are a few components of taxes that everyone should know about.
Pro Tip
If you are concerned about what your after-tax income will be, you can use an annual salary calculator and a monthly budget to get an idea of what your financial situation will be at the end of the fiscal year.
FICA tax
The FICA tax is used to fund Social Security and Medicare. Everyone working, even if they collect Social Security, is expected to pay a FICA tax. As of 2022, FICA has a fixed rate of 7.65% on all taxable income up to $147,000.
After hitting $147,000 of taxable income, the FICA tax is no longer applicable, as this is the maximum income considered when calculating Social Security benefits. Though there have been discussions of raising the income cap for the FICA tax, this cap hasn’t increased as of 2022.
Federal income taxes and marginal tax brackets
In 2021 the IRS announced the annual inflation adjustments for the tax year 2022. Some of the changes include increases to the standard deductions. The standard deduction is the amount of your earned income that is not subject to taxes. For single taxpayers, the standard deduction will be $12,950, an increase of $400.
With marginal tax brackets, the more money you make, the more money you can expect to pay in taxes. It’s important to note that working more hours a week will never lower your overall income. However, once you change tax brackets, your tax burden will change, and the resulting take-home pay will likely be different. Individuals are only taxed at each bracket for the money they make relevant to the bracket.
Example:
If someone made $20 an hour and had a full-time income, they would likely remain in the 12% tax bracket unless they had a source of additional income.
But there’s a big jump in the tax rate at around $42,000 a year, where the bracket changes from 12% to 22%. This means if someone made $40 an hour, almost half of their gross income would be taxed at the 22% rate.
Pro Tip
Although paying a higher tax rate is never fun, remember your take-home pay will always be higher when you get a raise. However, the percentage share of your after-tax income will get smaller.
Is $7.25 an hour enough to live on?
It may be the federal minimum hourly rate, but, unfortunately, $7.25 an hour is below the living wage in all states. It even sits below the poverty wage in Alaska. A living wage considers the local cost of living in a state (or even county), including the average costs of basic expenses. As of 2022, the cheapest living wage is $14.85, more than double the federal minimum wage to meet just the minimum cost of living. Despite this, 20 states have not increased their minimum wage from this number.
Below is the living wage an employee must receive in order to meet the minimum standards of living in that particular state.
Pro Tip
If your top priority is to start saving money, start by putting together an example budget. Then, using a salary calculator, you can decide whether a $7.25 per hour salary is enough for your basic expenses.
Sample $7.25 per hour budget
$7.25 an hour isn’t substantial for most people to live on, even with a strict budget. For instance, let’s say you live in Delaware making $7.25 an hour. Using the table below, we’ll assume your take-home pay comes out to $13,058.38.
| Category | % of monthly salary | Amount |
|---|---|---|
| Housing | 30% | $3,917.50 |
| Food | 15% | $1,958.76 |
| Utilities | 5% | $652.92 |
| Transportation | 10% | $1,305.84 |
| Insurance | 15% | $1,958.76 |
| Debt payments | 10% | $1,305.84 |
| Personal expenses | 5% | $652.92 |
| Savings | 10% | $1,305.84 |
| Total | 100% | $13,058.38 |
Unless you can save money from not paying rent (maybe by living with a family member), this is not a feasible salary to live on. The federal minimum wage requires you to find a living situation for around $325 a month and spend only $163.23 for food a month. Even as a single person, this budget is tight.
Be sure not to use your gross income for your budget breakdown. Using this number will make you think you have more money to spend than you actually do, which could land you in trouble.
State income taxes and take-home pay
State income taxes often work the same way as federal ones, with a few exceptions. Some states, such as Alaska, Florida, Nevada, and several others, have effectively no income tax. In states such as these, the state will often have much high property taxes or a higher sales tax rate instead of taxing your weekly pay or monthly wage.
There are also several states with a flat income tax rate applied to all individuals equally. Critics of these types of tax structures claim they unfairly benefit those with higher incomes, but several states have recently taken measures to adopt their own flat tax rate structures.
Alternative state taxes
Although the specifics will vary from state to state, the following are all types of taxes that can affect how much of your annual income can potentially stay in your bank account. Because the rules vary from state to state, be sure to know what applies to where you live.
Luckily, we’ve done the math for you. Starting with your pretax income of $15,080, check the table below to see what your annual take-home pay will be in each state. In addition to the state income tax percentage listed, this table shows your take-home pay once FICA (7.65% or $1,153.62) and federal income taxes (1.68% or $253) have also been withdrawn.
| State | State income tax (%) | State income tax ($) | Take-home pay* |
|---|---|---|---|
| Alabama | 3.67% | $554 | $13,119.38 |
| Alaska | 0% | $0 | $13,673.38 |
| Arizona | 0.56% | $85 | $13,588.38 |
| Arkansas | 5.04% | $760 | $12,913.38 |
| California | 2.75% | $414 | $13,259.38 |
| Colorado | 0.76% | $115 | $13,558.38 |
| Connecticut | 0.03% | $4 | $13,669.38 |
| Delaware | 4.08% | $615 | $13,058.38 |
| Florida | 0% | $0 | $13,673.38 |
| Georgia | 2.97% | $447 | $13,226.38 |
| Hawaii | 5.29% | $798 | $12,875.38 |
| Idaho | 0.61% | $92 | $13,581.38 |
| Illinois | 4.19% | $631 | $13,042.38 |
| Indiana | 3.02% | $455 | $13,218.38 |
| Iowa | 4.83% | $729 | $12,944.38 |
| Kansas | 3.42% | $516 | $13,157.38 |
| Kentucky | 4.11% | $620 | $13,054.38 |
| Louisiana | 2.81% | $423 | $13,250.38 |
| Maine | 0% | $0 | $13,673.38 |
| Maryland | 3.18% | $479 | $13,194.38 |
| Massachusetts | 3.54% | $534 | $13,139.38 |
| Michigan | 2.87% | $433 | $13,240.38 |
| Minnesota | 1.15% | $174 | $13,499.38 |
| Mississippi | 2.25% | $339 | $13,334.38 |
| Missouri | 0.50% | $76 | $13,597.38 |
| Montana | 2.05% | $309 | $13,364.38 |
| Nebraska | 2.60% | $393 | $13,280.38 |
| Nevada | 0% | $0 | $13,673.38 |
| New Hampshire | 0% | $0 | $13,673.38 |
| New Jersey | 1.63% | $246 | $13,427.38 |
| New Mexico | 0.54% | $81 | $13,592.38 |
| New York | 2.11% | $319 | $13,354.38 |
| North Carolina | 1.51% | $227 | $13,446.38 |
| North Dakota | 0.34% | $52 | $13,621.38 |
| Ohio | 0% | $0 | $13,673.38 |
| Oklahoma | 2.56% | $387 | $13,287.38 |
| Oregon | 8.38% | $1,264 | $12,409.38 |
| Pennsylvania | 3.07% | $463 | $13,210.38 |
| Rhode Island | 0.56% | $85 | $13,588.38 |
| South Carolina | 0.50% | $76 | $13,597.38 |
| South Dakota | 0% | $0 | $13,673.38 |
| Tennessee | 0% | $0 | $13,673.38 |
| Texas | 0% | $0 | $13,673.38 |
| Utah | 4.95% | $746 | $12,927.38 |
| Vermont | 1.96% | $296 | $13,377.38 |
| Virginia | 3.68% | $555 | $13,118.38 |
| Washington | 0% | $0 | $13,673.38 |
| Washington, D.C. | 1.01% | $152 | $13,521.38 |
| West Virginia | 3.90% | $589 | $13,084.38 |
| Wisconsin | 1.03% | $155 | $13,518.38 |
| Wyoming | 0% | $0 | $13,673.38 |
| Estimated state income taxes from the 2021 tax calculator. | |||
| *Take-home pay calculated after subtracting FICA tax, federal income tax, and state income taxes. |
Dividends
Not all states tax dividends the same way, but most choose to tax them as personal income. Dividends also generally have a marginal income rate applied to them. For states without a personal income tax, dividends are typically taxed at roughly 25%.
Property taxes
In states with a low property tax, you can expect to pay around 0.5%, while states on the higher end of the spectrum top out at about 2.5% in annual property taxes. No matter where you live, the overall cost of your home will be the main factor in determining your property tax obligation.
Sales taxes
Sales tax is generally applied to all non-exempt purchases made within a state. Much like minimum wage laws, sales tax can change on a more localized level. It is no small coincidence that states with no, or next to no, income tax often have some of the highest overall sales tax rates in the country.
For example, Tennessee does not enforce income taxes on hourly wages. However, the state does have what is effectively the highest sales tax rate in the country when both state and local taxes are factored in.
Key Takeaways
- A $7.25 per hour annual salary is about $15,000, provided you work 40 hours a week.
- You can usually expect to be paid time-and-half if you work over 40 hours a week.
- When calculating your monthly salary, if you are paid an hourly wage, be sure to subtract your meal breaks.
- Everyone is responsible for paying federal income taxes on their entire salary. However, you are only responsible for paying FICA taxes on your first $147,000.
- Net annual salary is a major factor to consider when relocating. However, make sure that your net income doesn’t come at the cost of a severely reduced quality of life.
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