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$40,000 a Year Is How Much an Hour? (Full Guide)

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Written by Publishing Team

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Most employers looking for new employees usually publish their expected annual salary requirements along with the job description. You might see a list of open jobs with a $40,000 annual salary requirement, for example, and find yourself wondering how much you’d make per day or week if you were hired.

This article will break down this salary amount for you, explain why the site is important, and provide some pointers on budgeting so you can increase your earnings.

What does $40,000 a year look like?

Let’s say you have 40 hours of work per week. This means that you work a total of 2,080 hours per year (40 x 52) and about 173 hours per month. So let’s break these numbers down.

$40,000
Per month $3333.33
for a week $769.23
Per day $153.84
per hour USD 19.23

What about income taxes?

Of course, federal income taxes reduce the amount you actually get home. One individual earning $40,000 will be in a 12% tax bracket. So how much tax will this individual pay according to the 2020 tax bracket thresholds?

The IRS calculates taxes on a cumulative basis. Only the amount above the previous bracket is taxed at the higher level. The first $9875 is taxed at a rate of 10% ($987.50). The rest is taxed at a rate of 12% ($4,681.50).

$40,000 after-tax breakdown ($34,331)
Per month USD 2860.91
for a week $660.21
Per day $132.04
per hour $16.50

Where you live is important

Many states in the United States also collect state income tax in addition to federal income taxes. The taxable amount varies by state. This is a sample:

  • New York: 4% to 8.82%
  • Colorado: 4.63%
  • Georgia: 1% to 5.75%
  • California: 1% to 12.3%

Therefore, if you earn $40,000 and live in California, you will pay an additional $888.02 annually in state income taxes.

Nine states in the United States do not have income taxes. Those states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. If you are trying to maximize your income from home, it pays to live in one of those states.

Is $40,000 a good salary?

The minimum wage in the United States is $7.25. If you work 40 hours a week, that comes to $15,080. For a family of four in 2021, the indicative poverty threshold is $26,500. For an individual, the indicative poverty threshold is $12,880.

So the $40,000 salary is well above the minimum wage and poverty guidelines. But is this enough? The short answer is to stop. Do you have debts that you are currently paying? What are your expenses like? Everyone has different circumstances, needs, and financial goals.

budget methods

Budgeting is the best way to keep track of and control your finances. Budgeting may seem intimidating, but that doesn’t mean you can’t have fun or enjoy life. It just means that you understand where your money is going each month. A budget allows you to prioritize your spending on what matters most to you.

Here are two common methods of budgeting:

  • 50/30/20 . method50% goes to needs, 30% to desires, and 20% to saving or paying off debts.
  • Envelope method: You create an envelope for each spending category and divide your money into each envelope.

Ultimately, it’s up to you how to budget, but it’s a good practice.

Our in-house research team and on-site financial experts work together to create content that is accurate, unbiased, and up-to-date. We validate every statistic, quote, and fact using reliable primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

About the author

Scott Jeffries is a Florida-based seasoned technologist. He writes on business, technology, digital marketing and personal finance topics. After earning a Bachelor’s degree in Management Information Systems with a minor in Business, Scott has spent 15 years working in the technology field. He’s helped Fortune 100 startups bring software products to life. When he’s not writing or building software, Scott can be found reading or spending time outside with his kids.

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About the author

Publishing Team