This article was coauthored by Darron Kendrick, CPA, MA. Darron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.
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The real hourly wage takes into account the work costs that serve to increase or decrease your annual income amount. Not only is knowing your real hourly wage useful in terms of budgeting both your time and money, it's also a great tool for comparing prospective jobs. In fact for each individual worker, even two jobs that offer the exact same base hourly wage rate can have wildly varying real hourly wage rates because of each individual worker’s transportation, childcare and other expenses. ^{[1] X Research source }
Steps
Method 1
Method 1 of 3:Determining Annual Work Expenses

1Understand your real hourly wage. Most people are familiar with their hourly wage, but chances are very good your real hourly wage is less. Your real hourly wage deducts all the costs associated with doing your job from your income, and divides the result by all the hours you spend doing work related tasks.^{[2] X Research source }
 For example, you may earn $30,000 per year but, when you deduct your taxes, costs to commute to work, costs to eat at work, and clothing costs, you are left with a smaller net salary each year. After expenses, you may earn $20,000, for example. When you divide this by the number of hours you spend on all work related tasks (working from home, for example), you would get your real hourly wage. This may be less than the hourly wage you see on your pay check.
 When you know your real hourly wage, it can give you perspective on how much you are spending. For example, you may make $20 per hour, but your real hourly wage may be $10. This means when you eat out and buy a $20 meal, you are really trading in two hours of work, instead of one.

2Calculate your total annual income. In order to calculate your real hourly wage, you must first calculate your total annual income. This is because your annual income is the starting point from which you will subtract the costs, time and other expenses that comprise your real hourly wage.
 If you are a salaried employee you should use your yearly salary amount as your annual income.
 If you are paid based on an hourly wage rate, you should multiply your hourly wage rate by the total number of hours you expect to work in the upcoming year.
 If you are an hourly employee you should make sure to include any paid overtime or other pay received for work completed beyond the agreedupon number of hours you work each week.
 For example, if you make $30 per hour, and expect to work 40 hour weeks all year, your annual income would be $62,400 (or 40 hours per week X 52 weeks in a year X $30 per hour).
 Keep in mind that the average person who works in a fulltime salaried position works about 49 hours a week.

3Calculate the total annual amount of employment benefits. Employee benefits are added to your actual annual earnings because they are valuable goods/services that you are benefiting from without paying for.
 Does your employer offer health insurance, life insurance, dental and vision and/or discounted gym memberships?
 Does your job provide you with a free or subsidized computer or cell phone? How much would you pay for these items on your own?
 Does your employer match your 401(k) contribution or provide other retirement benefits?
 Add these amounts to your total annual income.

4Determine your annual income tax expenses. Federal, state and local income taxes greatly decrease the amount actually received each pay period. Calculate the total amount of taxes paid each year by multiplying your annual income by each relevant tax percentage rate. Or look at your W2 or other income records from the previous year in order to get an estimate of your projected income tax expense.
 Use this formula to determine the percentage of gross income paid in taxes each year: Projected Tax Rate = 1  (net income/gross income). Multiply the results by 100 to see what percentage of your income goes to taxes. For example:
 1 – $46,500/$62,000 = .25.
 .25 x 100 = 25, meaning that you are taxed at a rate of 25% of your gross income.
 If your tax rate is 25%, and your annual income is $62,000, your after tax income would be $46,500.
 U.S. workers who do not have a W2 can look up their hourly rate in the "Circular E" tax tables at www.irs.gov to find the amount that should be withheld.
 Use this formula to determine the percentage of gross income paid in taxes each year: Projected Tax Rate = 1  (net income/gross income). Multiply the results by 100 to see what percentage of your income goes to taxes. For example:

5Calculate all of the expenses associated with your employment. To determine your employment related expenses, consider the things you spend money on that you would not need to if you didn't work. Major categories include transportation, food, clothing, and childcare.^{[3] X Research source }
 Transportation costs related to travelling to and from work can have a big effect on your real hourly wage. Sit down and estimate how much money you spend each month on gas, public transportation and other travelrelated expenses associated with your job. Multiply these monthly expenses by 12 in order to create a good estimate of your yearly transportation workrelated expenses. If you want to be precise, find out the gas mileage for your vehicle (40 cents per mile), for example, and multiply this by the number of miles to your work.
 The costs associated with sending your child to daycare or school should be factored in when calculating your real hourly wage. Make sure to include annual costs for childcare services such as tuition and babysitter fees.
 If you are required to purchase equipment or uniforms in order to perform your work duties, these costs should be included when calculating workrelated expenses.
 Estimate how much money you spend per month on food that you consume during your lunch break, or while otherwise on the job. Multiple this monthly amount by 12 in order to determine your annual work food costs.
 Some people consider vacations a necessary decompression from work, and so count vacation travel as a workrelated expense.^{[4] X Research source }

6Adjust for employer reimbursements. If your employer provides vacation pay or reimbursement for transportation, travel, or other costs, don't forget to deduct that reimbursement from your expenses. Alternatively, you can calculate all your expenses separately, then add the reimbursement value to your income.

7Tally up all of your workrelated expenses. Create a rough estimate of the cost of each workrelated expense discussed above. Add together the costs of workrelated food, transportation, clothing, childcare and any other similar cost in order to determine your total amount of workrelated expenses.

8Deduct your total expenses from your aftertax annual earnings to determine your real income. Take your aftertax earnings ($46,500, for example), and subtract your workrelated expenses.
 If your aftertax earnings are $46,500, and your total workrelated expenses are $10,000, your real income would be $36,500.
 $36,500 would be your real income, or how much you truly have to spend on your own personal expenses and interests.
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Method 2
Method 2 of 3:Determining Hours Spent on Work Related Tasks

1Begin with your annual hours spent at work, including overtime. The easiest way to determine this is to start with the paid hours for your job every week. If you have a 40 hour per week job, you can annualize this by multiplying it by 52 (the number of weeks in a year). Estimate your overtime hours by using previous years as an example, or making an educated guess (for example, 1 hour per week on average).
 Your annual work hours, for example, may be 2080 (or 40 x 52).

2Factor in daily commuting time. If you commute one hour to and from work each day, add two hours to your total work time each day. Time spent going to and from work is technically time spent devoted to your job even though you are not getting paid, and it should be considered as part of your total work time.
 One easy way to do this is simply to multiply the amount of time spent commuting every day by the number of days spent working, and then adding this to your annual hours spent working.

3Include any time spent working from home. If you spend time at home checking emails, doing projects, or doing any other time at work (for which you are not paid), include this, as these are hours devoted to work.
 Ask yourself how many hours per week on average you devote to at home work, and multiply this by 52.
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Method 3
Method 3 of 3:Calculating Your Real Hourly Wage Rate

1Start with your "real income". Your real income is your annual income minus any taxes and work related expenses. If your annual income was $62,000, taxes were $15,500, and total work related expenses were $10,000, your real income is $36,500.

2Divide your real income by your total hours spent on work related tasks. This is the sum of all the hours spent at work, on overtime, working at home, and commuting to work. You may have determined that this total is 3000 hours each year.
 If you divide your real income ($36,500), by the total number of hours spent on work related tasks (3000), you would get a result of $12.16. This is your real hourly wage.

3Compare your real hourly wage to your paid wage. In this case, if your annual income was $60,320, and you work 40 hours per week, your paid wage would be $29 per hour. This is the amount it would say on your pay stub. When you factor in taxes, work related expenses, and all the extra time you spend commuting and working at home, you can see that your real hourly wage is significantly less.^{[5] X Research source }
 A lower hourly wage means that things are relatively more expensive for you, and this can help you adjust your spending. You may be less inclined to spend $100 when you realize it equates to almost 10 hours of work as opposed to 3 or 4.
 You can also use this figure to compare potential jobs.A new job prospect may have a higher wage on paper, but when you factor in things like commuting time and distance, work from home hours required, or a more expensive wardrobe, you may find that the higher wage job actually has a lower real hourly wage than your current job. This can help you make a better financial decision.
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Expert Q&A

QuestionIf you are converting hourly, daily, weekly, or biweekly pay to monthly pay, why is it necessary to first calculate the annual pay?Darron Kendrick, CPA, MADarron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.
Financial AdvisorCalculating annual pay merely normalizes the pay amount. Biweekly, semi monthly, and monthly methods can all yield slightly different results depending on whether or not one is an hourly employee. Annualizing tends to remove these discrepancies. 
QuestionIf you work 6 hours 4 days a week and get paid 10 dollars an hour, how much is your check?Darron Kendrick, CPA, MADarron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.
Financial AdvisorYour gross check, which refers to the entire amount of money paid before tax, should be $240. 
QuestionIf I work 38 hrs for $24 an hour, how much do I receive after tax?Darron Kendrick, CPA, MADarron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.
Financial AdvisorThe amount one receives after tax depends entirely on the amount of withholding exemptions one claims on the form W4 and what amount, if any, one's state requires based on their calculation. It may also be impacted by other voluntary deductions, such as contributions to an employee savings plan, medical insurance, etc. 
QuestionMy employer says he will pay my me 15.00 an hour, so that after taxes I will bring home 11.00 an hour. Is this the right amount, before taxes?Darron Kendrick, CPA, MADarron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.
Financial AdvisorThis amount is about 26% of your gross. In line with article, I would say that is reasonable. 
QuestionHow much is your hourly rate, if your pay is $1,284.06 twice a month?Darron Kendrick, CPA, MADarron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.
Financial AdvisorAt twice per month, one would expect 24 paychecks a year. This calculates to an annual pay of $30,817. If one works 40 hours per week for 52 weeks, then the hourly rate is $14.82 per hour. 
QuestionIf I work 6 hours a day every two week for six days, and I get paid $805 dollars, what do I make in an hour?Darron Kendrick, CPA, MADarron Kendrick is an Adjunct Professor of Accounting and Law at the University of North Georgia. He received his Masters degree in tax law from the Thomas Jefferson School of Law in 2012, and his CPA from the Alabama State Board of Public Accountancy in 1984.
Financial AdvisorSix days times six hours is 36 hours. $805 divided by 36 is $22.36 per hour.
Tips
 High stress jobs require more time spent relaxing off the clock. If this cuts into time you'd like to devote to other projects, or if your relaxation methods are costly (such as "retail therapy" or dining out), this may be a hidden job cost. A less stressful, lower paying job may be worth it if you end up happier and thriftier in your offtheclock life.Thanks!
 Things like changing to a 4day week, carpooling or taking mass transit so you can work or read while you're commuting, can all add a few extra dollars to your real hourly wage.Thanks!
 If you plan well, medical and childcare flexible spending plans are also a cost savings to you because they increase your spending ability and can be considered part of your "income". However, these savings reduce your taxable income, so if you already account for that with accurate tax figures, don't doublecount by adding it to your benefits.Thanks!
References
 ↑ http://study.com/academy/lesson/nominalwagedefinitionlessonquiz.html nominal hourly wage rate
 ↑ http://www.getrichslowly.org/blog/2008/10/20/howtocomputeyourrealhourlywage/
 ↑ http://www.efile.com/taxdeduction/employeeexpensededuction/employeeexpenses/
 ↑ https://www.psychologytoday.com/blog/insightis2020/201307/vacationdecompressionthreehourplancheckin
 ↑ http://www.getrichslowly.org/blog/2008/10/20/howtocomputeyourrealhourlywage/
About This Article
To calculate your real hourly wage, start by determining your total annual income. Also, add up your total employment benefits, such as health insurance or a 401(k) plan. Next, look at your previous year’s W2 to estimate your projected income tax expense. Then, calculate all of the expenses associated with your employment, including transportation, childcare, and food. Deduct your total expenses from your aftertax annual earnings to determine your real income. To figure out how many hours a week you spend on workrelated tasks, keep reading our Certified Public Accountant’s article!