If you need a little extra help running payroll for hourly employees, this paycheck calculator is built for employers. You can double check your calculations for hourly employees or make sure your workers get the right take-home pay. You’ll see payroll taxes, overtime rates, and everything else you need to get those paychecks right. If this ever gets overwhelming, it could be time to consider payroll with full-service options to reduce your workload.
Behind the numbers
Behind the numbers
Updated: April 24, 2026
State-by-state paycheck calculators
Click the dropdown below to find your state’s paycheck calculator and quickly calculate or double-check your employees’ paychecks.
How is payroll different for hourly and salaried employees?
At the end of the day, the act of running payroll is pretty similar for any type of employee. You just take their gross wages (or how much money they’ve earned in a given pay period) and withhold local, state and federal payroll taxes, plus any additional payroll deductions for things like health benefits, a retirement plan, or garnishments. That said, there’s a number of hourly payroll software companies that keep this math from getting too complicated.
The path from gross wages to net wages (or take-home pay) doesn’t really change much. The primary difference between payroll for hourly and salaried employees is how you calculate those gross wages in the first place.
Gross wages for hourly employees
For workers whose compensation is based on how much they work, you calculate their gross wages by multiplying the number of hours they worked during a pay period by their hourly pay rate.
It’s pretty straightforward, generally, but a number of states have overtime laws which can increase employees’ pay rate if they work more than a certain number or hours in a day or in a week (typically 8 hours/day or 40 hours/week). Make sure to account for these wrinkles when you calculate paychecks for hourly workers.
Handling the “no tax on overtime” rule
With the passage of the One Big Beautiful Bill, an employee needs to understand that the no-tax-on-overtime rule is something to take advantage of when filing taxes. To learn more, we spoke with Tom Brock, CPA, CFA, and a frequent OnPay contributor. Tom says, even though it does not come into play at the payroll level, employers should understand what to do. “Employers should withhold federal income tax on overtime wages until the Internal Revenue Service issues new withholding guidance,” he explains. “This prevents under-withholding and protects both the employer and employee from unexpected tax bills.”
“That said, an employee who earns overtime regularly can adjust his or her Form W-4 to reduce withholdings. Unfortunately, there is no mechanism to target overtime wages directly. The most practical approach is to increase Step 3 (dependents/credits) or add an amount in Step 4(b) (deductions), which lowers total withholding across all pay. To achieve the desired result, the employee should consult with a tax professional.”
— Tom Brock, CPA, CFA
Gross wages for salaried employees
For employees who are paid an annual salary, gross pay is calculated by dividing their annual salary by the number of pay periods in a year. For example, if an employee earned an annual salary of $100,000, this is what their gross wages would be for different pay periods (assuming there are no other pre-tax deductions):
| Pay schedule | Gross wages (based on $100k salary) |
| Weekly (52 pay periods/year) | $1923.08 |
| Bi-Weekly (26 pay periods/year) | $3846.15 |
| Bi-Monthly (24 pay periods/year) | $4166.67 |
| Monthly (12 pay periods/year) | $8333.33 |
To understand more about choosing different pay schedules, here’s a detailed look at the issue. Also, calculating gross wages is only one part of payroll. If you’re paying a single employee, there are also setup steps, tax requirements, and ongoing filings to consider. This guide explains how to run payroll for one employee from start to finish.
Who should be salaried and who should be paid hourly?
When they hire an employee, employers have some discretion to choose who is paid hourly and who is paid a salary. Typically, employees whose hours are fixed (or consistent), and employees at higher compensation levels are offered a salary. Employees at lower compensation levels whose hours are more variable tend to receive an hourly paycheck.
However you choose to handle compensation, there are a few rules that need to be followed — most notably the rules for exempt and non-exempt employees under the Fair Labor Standards Act (FLSA). In a nutshell, the FLSA says that employees should be entitled to overtime pay when they work more than 40 hours in a week, unless they are “exempt” and fit into one of these categories:
- They are an executive
- They offer skilled professional services
- They have administrative or management responsibilities
- They are highly compensated (earning at least $107,432 a year under currently enforced DOL rules and performing an exempt duty)*
- They are a computer programmer or analyst
- They have an outside sales role
There are a number of other small exceptions. Take a closer look at the classification of exempt and non-exempt employees or reach out to an employment or tax pro if you have more questions.
*Note: The DOL’s planned salary threshold hikes were vacated by a Texas US district court on November 15, 2024. With cases still moving through the courts, it’s a good idea for employers to stay tuned for potential regulatory shifts.
Good to know
“When deciding whether to pay an employee a salary or an hourly wage, the biggest risk for an employer is misclassifying employees as exempt (vs. non-exempt) when they fail either the salary or duties test. This can trigger liabilities for unpaid overtime, back wages, and penalties levied by the U.S. Department of Labor. Additionally, for roles that can legally be paid via a salary or hourly wage structure, an employer risks using a suboptimal compensation framework and incurring excessive expense.”
— Tom Brock, CFA, CPA
Ideally, an employer should adopt the compensation structure that most economically aligns with the workload (given estimated variability in hours) and is sustainable in terms of administrative effort and workforce morale.
Getting from gross wages to a paycheck
Once you’ve figured out gross wages, it’s time to calculate your actual payroll by withholding federal, state, and local payroll taxes and applying any other deductions that might apply to an employee. This process basically works the same for all employees whether they are salaried or hourly. See more on how to calculate payroll taxes if you want to really get into the nitty gritty.
Expert insight: Common withholding errors
“The most common withholding errors include misclassifying employees as independent contractors, failing to properly calculate supplemental wage withholdings (e.g., bonuses and commissions), miscalculating taxable wages due to the mishandling of tax-exempt and tax-deferred benefits, and failing to deposit payroll taxes on a timely basis. Problems also arise from outdated or improperly completed Form W-4s, which can lead to systematic under- or over-withholding. All of the aforementioned errors can trigger IRS penalties. Even small errors, if repeated across payroll cycles, can be costly.”
— Tom Brock, CFA, CPA
Other useful paycheck calculators
The calculator on this page is focused on normal pay runs for hourly employees, but there are also a number of special situations when paychecks need a little more finagling. When an employee departs, for example, you may need to issue a final paycheck. Or if you offer tipped wages or bonuses, you may need to add another step or two to your gross pay formulas for hourly and salaried employees.
This calculator and others included on this page are for informational purposes only and to provide general guidance and estimates; it should not be relied on for tax, legal, or accounting advice. If you are unsure about your obligations or need assistance, you should consult your own tax, legal, or accounting advisor for formal consultation.