$40 An Hour Is How Much a Year?

• 40 hours x 52 weeks = 2,080 hours worked in a year.

From here, all we have to do is multiply our total yearly hours by our hourly rate of pay:

• 2,080 hours x $40 = $83,200 per year.

Assuming you work a 5-day week without taking any days off over the year, you can earn $83,200 a year on a $40 hourly salary. By American standards, that’s a pretty decent wage.

However, for most of us, taking at least two weeks off per year is necessary, and if you’re being paid by the hour, you won’t get paid for the time you take off. So let’s subtract 80 hours (equivalent to two weeks of work) from our yearly total of hours worked and recalculate for a more precise annual amount:

• 2,080 – 80 = 2,000 hours per year.
• 2,000 hours x $40 = $80,000 per year.

Even with two weeks of unpaid leave allowed for, you are still making $80k per year.

Monthly Income

I will use a monthly measure based on the fact that most employees are paid every four weeks. As we have assumed a 40-hour working week, all we have to do is multiply this by the number of weeks worked in a month:

• 40 hours x 4 weeks = 160 hours per month.

Once again, we now have to multiply our total hours by our hourly rate:

• 160 hours x $40 = $6,400 per month.

Weekly Income

As we have assumed a 40-hour work week, all we have to do is multiply this by our hourly rate:

• 40 hours x $40 = $1,600 per week.

Daily Income

Assuming you work an 8-hour day, multiply this by your hourly rate:

• 8 hours x $40 = $320 per day.

After Tax Earnings

It’s all well and good working out your gross annual income from a $40 per hour wage, but that doesn’t represent the amount you will take home after taxes have been deducted. Federal Income Tax, Medicare, Social Security, and extra state taxes are going to do some serious damage along the way.

 Let’s now work out just how much that’s going to be on a $ 40-per-hour wage.

Federal Income Tax

To calculate how much Federal income tax you’ll pay on a $40 per hour wage, assuming you work all 52 weeks of the year, we have to check out the relevant Federal Income Tax brackets and do some simple calculations.

For the current tax year, the following table lists the tax brackets and the corresponding tax rates for each of those:

As we can see, three different tax brackets affect a person earning $40 per hour who works full-time every week of the year. To get an overall figure, all we have to do is add these three totals together:

• $1,100 + $4,046.88 + $8,424.28 = $13,611.16 owed in Federal Income Tax.

FICA Taxes

7.65% of your income will go towards social security and Medicare payments. Let’s do the math:

• $82,300 x 0.0765 = $6,295.95 owed in FICA taxes.

State Income Tax

Things get a little more complicated when trying to work out your level of state income tax. There are seven states nationwide that don’t charge any income tax whatsoever. These are Alaska, Washington, Florida, Nevada, Texas, Wyoming, and South Dakota. 

Of the remaining states, some charge a fixed rate regardless of income level, and others have tax brackets with different rates on a sliding scale. Having looked at the various rates around the country, we are going to assume for our calculations that if you live somewhere that charges state income tax, you will pay, on average, around 5% of your income:

• $83,200 x 0.05 = $4,160 owed in state income tax.

Overall Tax Owed

So our total tax bill will be $24,067.11. Now, all we have to do to work out the amount you will take home is deduct this figure from the gross yearly income:

• $83,200 – $24,067.11 = $59,132.89 net income after tax.

It’s always good to know how much tax you are paying in percentage terms. We do this by taking our overall tax bill and dividing it by our gross income. You then multiply the result by 100:

• $24,067.11 / $83,200 x 100 = 28.927% paid in taxes.

Here is a table showing how this tax rate will affect the amount you earn per hour, per week, and per month:

How does $40 per hour match up to the national average?

If you are prepared to work a full 40 hours each week without a single day off all year, your gross income of $83,200 puts you at the 76th percentile of American earnings. Simply put, only 24% of American workers earn a higher wage than you.

The average American worker earns $54,132 gross income per year, which is $26 per hour. So in comparison, you are earning just under 54% more than the average hourly rate.

How well can you live on $40 per hour?

Well, that’s really down to where you live and how expensive your tastes are. Live in an expensive city like San Francisco or New York, and you’ll be spending way more on housing than you would if you lived in rural Nebraska. 

Whilst you could undoubtedly afford to live in these places, there probably won’t be a lot left over at the end of each month. Choose your location wisely, and your level of disposable income could be substantially improved by lowering your base costs. That dream vacation or sexy sports car could become a reality if you don’t need to live in an expensive urban postcode.

Career Options

To reach an income level of $40 per hour, you will have to be educationally qualified in your area of interest. 

These careers all pay around that level:

• Real Estate Agent – $40.16 per hour.
• Midwife – $41.14 per hour.
• Speech Pathologist – $41.34 per hour.
• Veterinarian – $41.47 per hour.
• Massage Therapist – $42.45 per hour.
• Occupational Therapist – $43.87 per hour.