Home > Make Money > $40,000 A Year Is How Much An Hour? (Is It A Good Salary To Live On)

$40,000 A Year Is How Much An Hour? (Is It A Good Salary To Live On)

*This post may contain affiliate links. See disclosure for more information

Want to know if your new (or future) job making $40,000 a year is enough to live on? You’re also probably wondering, “$40,000 a year is how much an hour” (after taxes)?

Depending on where you live, and how many people are in your household, you can live quite comfortably on $40,000 a year.

woman holding paycheck dreaming of house car and trip-40000 a year is how much an hour
Can you live comfortably on $40,000 a year?

Stop wasting your money on expensive home & auto insurance! Gabi compares rates and finds you the cheapest insurance in minutes! Try Gabi (it’s FREE)

How much is 40000 a year per hour, week, biweekly, and per month?

A salary of $40,000 per year (assuming a 40-hour workweek @52 weeks per year) breaks down like this:

  • $3,333.33 per month
  • $1,538.40 biweekly
  • $769.20 a week
  • $153.84 a day
  • $19.23 an hour

Here’s how we did the math:

Take $40,000 and divide by 2,080 (40 hours a week multiplied by 52 weeks). The result is your hourly wage of $19.23 an hour.

Then, calculate up from there to determine the amount you would earn per day, week, biweekly, and monthly. Like so:

  • $19.23 multiplied by 8 work hours per day equals a daily rate of $153.84
  • You can then take your daily rate of $153.84 and multiply it by 5 (the number of workdays in a week) to determine your weekly pay of $769.20
  • From there multiply your weekly pay ($769.20) and you arrive at your biweekly pay of $1,538.40
  • Finally, calculate your monthly pay by either taking your salary of $40,000 per year and dividing it by 12 (the # of months in a year) $3,333.33 OR multiplying your daily wage of $153.84 by 21.67 (the average # of workdays in a month).

Of course, if your job offers paid time off, you will earn more per hour of actual work, which means all of these numbers will change.

On the flip side, if you earn a $40,000 salary (not paid by the hour) you could end up working more than 40 hours a week, which means your actual hourly pay would decrease.

Easy-peasy, right? But wait…there’s more!

40000 a year is how much after taxes?

This is where things get a bit sticky.

That’s because income taxes vary by state so…

If you live in Hawaii (highest income taxes) you’ll take home less than you would if you lived in South Dakota.

Here’s a quick breakdown of how much tax you can expect pay (on average) if you earn $40,000 per year in the US:

*Note: this table includes totals for State Income tax, Federal Income tax, Social Security, and Medicare contributions. It does not include property taxes, sales taxes, and other deductions/expenses.

StateIncome Tax ($)Total Tax
(% of income)
Net pay
Alabama$7,80519.5%$32,195
Alaska$6,20215.5%$33,798
Arizona$7,13617.8%$32,864
Arkansas$7,87719.7%$32,123
California$7,09017.7%$32,910
Colorado$8,05420.1%$31,946
Connecticut$7,39218.5%$32,608
Delaware$7,74519.4%$32,255
Florida$6,20215.5%$33,798
Georgia$7,97419.9%$32,026
Hawaii$8,51921.3%$31,481
Idaho$8,13820.3%$31,862
Illinois$8,07220.2%$31,928
Indiana$7,46218.7%$32,538
Iowa$7,91319.8%$32,087
Kansas$7,72519.3%$32,275
Kentucky$8,07620.2%$31,925
Louisiana$7,24618.1%$32,754
Maine$7,61119.0%$32,389
Maryland$7,79119.5%$32,209
Massachusetts$8,01820.0%$31,982
Michigan$7,73019.3%$32,270
Minnesota$7,83119.6%$32,169
Mississippi$7,63719.1%$32,363
Missouri$7,68419.2%$32,316
Montana$7,69119.2%$32,309
Nebraska$7,45618.6%$32,544
Nevada$6,20215.5%$33,798
New Hampshire$6,20215.5%$33,798
New Jersey$6,88517.2%$33,116
New Mexico$7,37518.4%$32,625
New York$7,91519.8%$32,085
North Carolina$7,85219.6%$32,148
North Dakota$6,52816.3%$33,472
Ohio$6,91717.3%$33,083
Oklahoma$7,70619.3%$32,294
Oregon$7,91519.8%$32,085
Pennsylvania$7,43018.6%$32,570
Rhode Island$7,22018.1%$32,780
South Carolina$7,77319.4%$32,228
South Dakota$6,20215.5%$33,798
Tennessee$6,20215.5%$33,798
Texas$6,20215.5%$33,798
Utah$8,04120.1%$31,959
Vermont$7,20218.0%$32,798
Virginia$7,89919.7%$32,101
Washington$6,20215.5%$33,798
West Virginia$7,68719.2%$32,313
Wisconsin$7,67619.2%$32,324
Wyoming$6,20215.5%$33,798
(Source) Permission to share with attribution to Savvybudgetboss.com

Did you know, there are (7) states that do not have an income tax? They are:

  • Alaska
  • Florida
  • Nevada
  • South Dakota
  • Texas
  • Washington
  • Wyoming

Two additional states (New Hampshire and Tennessee) do not levy a tax on earned wages, but they do tax investment income.

Is $40,000 a year a good salary?

The US Census Bureau estimates that the annual median personal income for 2019 was $35,977. Therefore, if you make $40,000 (or more) a year, you can consider yourself above average (as far as earnings in America go).

TIP: The key to living on $40,000 a year is to learn the importance of budgeting.

Can you live on 40000 a year?

As you can see from the table above, you’ll be able to stretch $40,000 further if you live in a state that doesn’t collect state income tax. Unfortunately, those states will often make up for lost revenue by increasing taxes in other areas such as property taxes, and sales taxes.

That said, my husband and I were able to live for years on $40,000 while raising our (3) children. In Colorado…which can be a pretty expensive place to live.

How did we do it? Frankly, it wasn’t always easy. Especially since it took me so long to learn how to live on a budget.

Eventually, I was able to recognize my money mistakes, pay off thousands of dollars of debt, and lower our family’s living expenses.

According to Go Banking Rates, the top 10 U.S. cities to live in if you make $40,000 a year (in 2020) are:

  • Cleveland, Ohio
  • Akron, Ohio
  • Toledo, Ohio
  • Brownsville, Texas
  • Birmingham, Alabama
  • Rochester, New York
  • Columbus, Georgia
  • Montgomery, Alabama
  • Shreveport, Louisiana
  • Memphis, Tennessee

Although, from personal experience, If I were you, I’d avoid living in any major city. When it comes to stretching your income, small towns are the way to go.

Related: Can you live off of $15 an hour?

Can you buy a house on $40,000 a year?

You can absolutely buy a house if you make $40,000 a year! You’ll just want to make sure your total housing expenses (mortgage, taxes, and insurance) do not exceed 28% of your gross monthly income.

Here’s an example: If you were to buy a home that costs $150,000 with $10,000 down and finance it at a rate of 3% your monthly mortgage would cost around $965 a month after allowing for real estate taxes and homeowner’s insurance.

You could afford the house in this example.

Here’s another example: If you were to buy a home that costs $300,000 with $10,000 down and finance it at a rate of 3%, your monthly mortgage would cost around $1,660 a month after real estate taxes and homeowner’s insurance.

You could not afford this home.

So, the answer to “Can I buy a home on $40,000 a year?” is ‘yes’ and ‘no’.

Could you buy a home in New York on a $40,000 salary? No. Could you buy a home in Nebraska on a $40,000 salary? Yes.

When we were raising our children (while living on one income), we were able to buy a comfortable 3-bedroom house in a small town in the midwest. Due to our income, we were able to qualify for a first-time homebuyer loan which required very little money down.

Tips for living on $40,000 a year:

  1. Live below your meansadopt a frugal lifestyle and never spend more than you make.
  2. Create a realistic budget-the number one reason why most budgets fail is due to people setting unachievable expectations. Don’t budget $200 for groceries when you usually spend $400. Instead, make small changes over time in order to reduce your budget.
  3. Save money-whenever you receive a raise, monetary gifts, or an unexpected windfall of cash, bank it, don’t blow it.
  4. Pay off debt-living on $40,000 a year (or less) is SO much easier to do when you’re debt-free!

$40,000 a year budget example

Here’s a budget example for someone who earns $2,816 per month after taxes using a 50/30/20 budget (50% of income spent on essentials, 30% spent on non-essentials, and 20% allocated for savings and debt repayment):

  • Rent/Mortgage: $650.00
  • Utilities: $125.00
  • Car Payment: $150.00
  • Insurance Payments: $200.00
  • Groceries: $205.00
  • Gas: $80.00
  • Savings/Charitable Donations/Debt Repayments: $562.00
  • (Non-Essentials): $844.00

Related: Can you live off of $18 an hour?

Jobs that earn $40K a year

According to the U.S. Bureau of Labor Statistics, you’ll need a high school diploma (at minimum) or an Associate’s degree if you’re looking to land a job making $40,000 (or more) per year.

Here are the top 10 jobs expected to have the most openings over the next decade:

  1. Maintenance and Repair WorkersWhat they do: Fix and maintain machines, mechanical equipment, and buildings. Median pay: $39,080 Education required: High school diploma
  2. Administrative AssistantsWhat they do: Perform routine clerical and administrative office duties. Median pay: $39,850 Education required: High school diploma
  3. Tractor Trailer and Heavy Truck DriversWhat they do: Transport goods from one location to another. Median pay: $45,260 Education required: High school diploma and professional driving school certificate
  4. Practical and Vocational NursesWhat they do: Provide basic nursing care. Median pay: $47,480 Education required: High school diploma and state-approved program
  5. Automotive Technicians and MechanicsWhat they do: Inspect, repair, and maintain cars and light trucks. Median pay:$42,090 Education required: High school diploma and certification
  6. BookkeepersWhat they do: Produce and check financial records for organizations. Median pay:$41,230 Education required: Associate’s degree
  7. Correctional OfficersWhat they do: Oversee people who have been arrested and are awaiting trial or serving time in jail or prison. Median pay:$45,300 Education required: High school diploma
  8. Broadcast and Sound EngineersWhat they do: Set up, operate and maintain sound equipment for media programs. Median pay:$45,510 Education required: Associate’s degree
  9. CarpentersWhat they do: Construct, repair, and install building frameworks. Median pay: $48,330 Education required: High school diploma
  10. Surgical TechnologistsWhat they do: Assist in surgical operations. Median pay: $48,300 Education required: Associate’s degree

If $40,000 a year is not enough…increase your income

If you don’t think you can make it on $40,000 a year, you can always make more money! Here are some quick ways to increase your income.

Ask for a raise. This is by far the easiest way to increase your income. I mean, really. Just ask. The worst your boss can do is say is ‘no’.

Find a part-time job. Work on your days off and bank the cash.

Join the gig economy. The gig economy consists of freelance or contract workers who work on-demand. Here are a few of the most popular gig economy jobs:

  • Food delivery-through Uber Eats or Door Dash
  • People delivery-Uber and Lyft
  • Handyman
  • Sell your skills on Fiverr
  • Rent your home on Airbnb

Pet sit. These days people are willing to pay more for pet sitting than child care. And, you don’t have to jump through as many bureaucratic hoops to start a pet sitting service.

Make money online. The opportunities to make extra money online in your spare time are endless. You can:

Make and sell crafts. If you like to create in your spare time, why not profit from your creations? Here are the top 80 crafts to make and sell.

$40,000 is how much an hour: Final Thoughts

To sum up, if you’re single with no debt, depending on where you live, you can do quite well on $40,000 a year.

On the other hand, supporting a family on $40,000 a year will be a little more difficult to do (however, it is still doable).

The most important thing to remember, no matter how much money you make, is that living on less than you make will help you stay out of debt which will result in more disposable income and more financial freedom!

If you need help creating a budget, here are 21 free printable budget templates to get you started.

Similar Posts