$40,000 A Year Is How Much An Hour – Is It A Good Salary For 2024?

Are you back on the job market or seeking a new career?

Have you found an exciting job posting, but the offered pay is $40,000 per year?

When considering the new job offer, you may be wondering, “$40000 a year is how much an hour?”.

And that’s a fair question we will thoroughly review.

A man holding his wallet facing a few bills hanging from hooks. $40,000 a year is how much an hour and can he make his budget work?

Can you make that salary work for your family and lifestyle, or do you need to keep looking?

Let’s take a look at the breakdown and see if $40,000 a year is a good salary or not.

How much is $40000 an hour?

If you work a 40 hour week, the breakdown of $40,000 a year comes down to $19.23 an hour. 

This calculation is based on individuals who work 40 hours per week (2080 hours a year) and all 52 weeks a year.

Let’s take a deeper look at how $40,000 per year breaks down:

  • $40,000 annual salary ÷ 2080 hours = $19.23 per hour
  • $19.23 per hour x 8 hours = $153.84 per day
  • $153.84 per day x 5 days = $769.23 per week

$40,000 a year is how much per month? 

Some people get paid semi-monthly which comes up to 24 paychecks per year.

In comparison, some individuals get paid biweekly, which gives you 26 paychecks per year. 

On a biweekly payment schedule, your paychecks will be smaller, yet you will have two extra paychecks per year. 

  • $40,000 ÷ 12 months = $3333.33 per month
  • $40,000 ÷ 24 paychecks = $1666.66 paid semi-monthly
  • $40,000 ÷ 26 paychecks = $1538.40 paid biweekly

If you are fortunate enough to get paid vacation time (PTO), you can divide the $40,000 by the number of weeks you are working. 

Some examples:

  • If you have one week of paid time off (PTO) per year, your hourly rate would be $19.61 per hour.
  • For two weeks of paid time off (PTO) per year, your hourly rate is $20 per hour.
  • If you have three weeks of paid time off (PTO) per year, your hourly wage is $20.41.
  • For those with four weeks of paid time off (PTO) per year, your hourly rate is $20.83.

Biweekly can refer to both twice a week or every two weeks. However, all references to biweekly in this article refer to every two weeks.

$40,000 a year is how much after taxes?

A few different factors affect income tax percentages.

Your paycheck is not only subject to federal taxes, but most states have their own income taxes as well. 

There are 9 states which do not have an income tax. 

  • Alaska
  • Florida
  • New Hampshire
  • Nevada
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

However, you can expect New Hampshire to still collect income tax on investment revenue such as interest and dividends. 

So how much can residents expect to receive in their hands after taxes have been applied? We have the breakdown. 

Using an income tax calculator, we compiled the following data that considers Federal Income tax, State Income tax, Social Security, and Medicare contributions.

StateIncome Tax $Total Tax %Net Pay
New Hampshire$6,15515.4%$33,845
New Jersey$7,30918.3%$32,691
New Mexico$7,53618.8%$32,464
New York$8,10120.3%$31,899
North Carolina$7,72019.3%$32,280
North Dakota$6,52616.3%$33,474
Rhode Island$8,17520.4%$31,825
South Carolina$8,49221.2%$31,508
South Dakota$6,15515.4%$33,845
Washington DC$8,35520.9%$31,645
West Virginia$7,73019.3%$32,270
Net pay calculations based on Federal & State taxes, Medicare, and Social Security.

So based on this information, for a $40,000 yearly salary, the net income ranges between roughly $30,802 and $33,845 per year.

  • Weekly paycheck = $592.34 to 650.86
  • Semi-monthly paycheck = $1283.41 to $1410.20
  • Biweekly paycheck = $1184.69 to $1301.73
  • Monthly paycheck = $2566.85 to $2820.41

These differences in taxes can make quite the monthly difference.

The most significant difference is just over $253 per month, which can cover quite a nice chunk of someone’s rent or mortgage.

Is $40,000 a good salary?

Is $40K a good salary?

According to Census.gov, the medium earnings for workers in 2020 was $41,535, which means 40k is slightly below that figure.

But it is important to consider a few different aspects when determining if a $40,000 annual salary is sufficient to live off of comfortably.

For example, taxes in my area are high, but an annual salary of $40,000 is still considered the average yearly income.

However, with the general cost of living (housing, food, transport, utilities), 40k is still a livable wage locally for a one or two-person household. 

But it’s all relative; a household with one child may feel like a salary of $40,000 a year is still manageable, while a family with six kids will likely disagree.

Individually, it would be best if you considered your state’s taxes, the cost of living in your hometown, the size of your family, and any specific needs your household may require (medical expenses, transport, education, etc.)

But a $40,000 annual salary can still be stretched with good budgeting.

How to live on $40,000 per year salary

While living on a salary of $40,000 per year may seem like a daunting task, many Americans make do with even lower wages.

In fact, with the federal minimum wage currently set at $7.25/hour, you will be making almost 3 times the hourly rate.

The best way of figuring out how to make your 40k salary work for you is to create a budget. 

Many often dread budgets, but drafting a budget helps visualize where your dollars need to go and what needs to be trimmed. 

  • Create a realistic budget: Considering your financial goals, expenses, debts, and lifestyle. 
  • Pay yourself first: Always pay yourself first. Don’t wait until the end of the month, expecting there to be money in your chequing account to put away. 

After doing the math and implementing as many cost-saving measures as you can, you may want to consider starting a side hustle to supplement your income.

Side hustles are also a great way to increase your ability to save money or pay off your debts faster. They can be temporary or long-term but can help when a budget is tight. 

Monthly Budget for $40,000 Salary

A $40,000 per year salary can often be quite manageable with sound budgeting.

When building up our family business, I often lived off a very tight budget, much lower than 40k, but budgeting was the key to my success at making it work. 

Here is a sample budget for a one-person household with a monthly income of $2671.75 (after taxes).

You can adjust the budget to your exact take-home pay and priorities.

  • Car payment = $200
  • Car insurance = $150, the average car insurance costs $133/month
  • Cellphone = $20, mobile data plans starting from $15 with mintbobile
  • Entertainment = $100
  • Gas = $80
  • Groceries = $150
  • Health Insurance = $200
  • Home insurance = $140, the national average is $132
  • Internet = $50
  • Miscellaneous = $100
  • Personal expenses = $100
  • Rent or Mortgage = Up to $890 (1/3 of your monthly income)
  • Savings = $267 (10%)
  • Utilities = $200

For a total of $2647, with $24.75 to spare.

The above budget is most feasible for individuals without debt.

If you have debts to pay, you can try to find more affordable housing or consider splitting costs with a roommate.

Is 40k a year middle class?

Multiple factors such as your state, metropolitan area, and the number of people in your household help determine your income class.

To determine whether $40,000 is considered middle class, Pew Research Center has an income calculator taking into account the data you input. 

For example, if you live in Flagstaff, Arizona, alone or with a significant other, $40,000 is considered middle class.

But the moment you become a three-person or more household, you fall under the lower-income tier. 

You can also dig deeper and compare your income to other individuals with similar levels of education, age, race/ethnicity, and marital status. 


A $20 an hour wage comes out to an annual salary of $41,600 before applicable taxes.

Earning $23 an hour, your gross income (before taxes) would be $47,480.

Depending on the size of your downpayment, an interest rate of no higher than 3.25%, and property taxes in your area of choice, you may be able to purchase a home in the range of $150,000 – $175,000.

It is, however, recommended to keep your housing budget to roughly one-third of your income ($860) and not to purchase a home at your maximum buying power to avoid financial strain.

Depending on your take-home pay, and the cost of living in your area, $40,000 can be considered a reasonable starting salary for a single person.

However, with the cost of necessities consistently rising, $40,000 could become insufficient without a solid budget set in place.

Similar Posts

$40,000 A Year Is How Much An Hour – Is It A Good Salary For 2024?