40k a year is how much an hour

40k a year is how much an hour - average salary in the US

More and more young people are entering the job market each day.

Important questions on job offers such as 40k a year is how much an hour need to be answered for them.

In this series of tutorial for young investors, I will be tackling on the topics of hourly wages and how they translate into annual salary.

40k a year is how much an hour | The Context

The context of this crucial question to convert 40k annual salary into an hourly rate is veryimportant.

If you happen to be a salaried employee who works a 9 to 5 regular job or 8 hours per day that is one scenario.

Conversely, if you are an hourly employee, you can use the answer to this question to determine two things:

  • How many hours you will need to work to get to this salary
  • How to use the rest of your time away from this job to generate more income

Let’s breakdown our analysis on a case-by-case basis.

Salaried Employee hourly Rate

We will clearly assume that 40k a year is the base salary without any other incentives.

Typically, in corporation, there is a year-end bonus based on the financial achievement of your company.

For now, let’s assume you work 8 hours a week Monday through Friday.

therefore, the numbers of worked hours per week is 8 times 5 = 40 hours.

If we purely assume that in a standard year, there are 10 holidays for the simplicity of the calculation .

A standard year has 52 weeks.

Let’s then Subtract 2 weeks for holidays and 2 weeks at least of personal vacation.

We are left with 52 weeks – 2weeks – 2 weeks = 48 weeks.

We can then use this 48 week number as our baseline for the following table with calculation.

40k a year is how much per hourNumber of Hours You WorkedYour Hourly Salary
48 Weeks worked48×40 = 1920 hours40000/1920= $20.83
49 Weeks Worked49×40 = 1960 hours$20.4
50 Weeks Worked50×40 = 2000 hours$20
How Much you make an hour for 40000 yearly Salary

You will be making between $20 and $21 an hour to reach that 40k a year.

Hourly Employee Model

The main difference for some hourly employees is that they may not have any vacation hours.

Some contractors also fall into this category.

Therefore, the number of worked hours will be a bit higher than in the previous case of salaried employees.

The resulting hourly rate will be lower.

In the summary table below, we will show you 51 weeks and 52 weeks of worked hours.

40k /year Salary is how much per hourNumber of Hours You WorkedYour Hourly Salary
51 Weeks worked51×40 = 2040 hours40000/1920= $19.6
52 Weeks Worked52×40 = 2080 hours$19.2
How Much you make an hour for 40000 yearly Salary as an hourly employee

Benefits of Salary vs Hourly

Between $19.2 and $19.6 is the hourly rate for someone who makes 40k per year.

That is a 6% reduction compared to a salaried employee who works fewer hours due to vacation time.

Often, Salaried employees may also benefit from free money into their retirement.

Most corporations match the first 4-5% of the money you decide to invest into your retirement.

This is a great source young people should be taking advantage of as early as possible because this money will compound over the years.

$40,000 a Year IS How Much After Taxes?

On paper, $40000 a year may seem like a lot of money.

But int he table blow, we are going to break down a potential take home amount from a yearly salary of $40k.

Depending on where you live, if there is state tax to factor in or not, your paycheck will be greatly impacted.

For the first example, let’s assume no state tax like in Florida or Texas.

Tax CategoryCost of TaxesTake Home Amount $
Social Security (6.2%)$2480$35520
Medicare (1.45%)$580$34940
401(k) Retirement contribution (5%)$2000
Federal Tax (10%)$3800$30140

In the above table, we assume you are saving 5% of your yearly salary for retirement.

This means that you will be paying taxes on $38000 instead of the original $40000.

Your yearly take home goes down for each line item suggested above.

In this simple example, a person who makes $40000 a year ends up with about 75% of that money: precisely $30140 – after paying tax.

This will be even less should you live in a place with state tax.

Is 40k a Year a Good Salary to Live Comfortably?

The cost of living varies in great deal across the country.

Some cities may be more suitable for a given annual income.

Based on recently reported cost of living numbers in several states and cities, these are the ranking of places where 40k per year which equates $20 an hour may be enough to live decently.

Average Yearly Salary in the US

Let’s examine the average yearly salary per state according to 2021 ZipRecruiter data.

40k a year is how much an hour - yearly salaries in the US by map and histogram
Average Salaries in the US as of 2021

This is the analysis provided by ZipRecruiter per the state view.

Top 50 Highest Paying States for Average Jobs in the U.S.

We’ve identified 11 states where the typical salary for an Average job is above the national average. Topping the list is Massachusetts, with Hawaii and Rhode Island close behind in second and third.

Rhode Island beats the national average by 7.1%, and Massachusetts furthers that trend with another $7,523 (11.3%) above the $66,665.

Significantly, Massachusetts has a very active Average job market as there are several companies currently hiring for this type of role.

With these 11 states paying on average above the national average, the opportunities for economic advancement by changing locations as an Average appears to be exceedingly fruitful.

About Our DataZipRecruiter salary estimates, histograms, trends and comparisons are derived from both employer job postings and third party data sources.

Data used to develop this report includes ADP data. ADP is an exclusive provider of employee payroll data for ZipRecruiter.

Table View of Average Salary Per State

StateAnnual SalaryMonthly PayWeekly PayHourly Pay
Rhode Island$71365$5,947$1,372$34.31
North Dakota$70067$5,839$1,347$33.69
South Dakota$68,022$5,668$1,308$32.70
New York$67,727$5,644$1,302$32.56
New Hampshire$65,421$5,452$1,258$31.45
South Carolina$63,020$5,252$1,212$30.30
West Virginia$58,867$4,906$1,132$28.30
New Jersey$58,149$4,846$1,118$27.96
North Carolina$53,703$4,475$1,033$25.82
New Mexico$53,675$4,473$1,032$25.81
Top 50 Highest States for Average Jobs in the US

The state with the lowest hourly rate is Florida around $25.

As such, 40k a year is 30% lower than the lowest state average.

It should be noted that the average number does not mean it is impossible to live decently in such a state.

The average median may be a better measure of how 40k a year can translate into a good living condition.

In fact, from the table above, we can derive that about 18% of the country live with less than an hourly salary of $20.

How Can You Make $40,000 per year?

There are many jobs out there where you can make $40,000 even if you do not have a big degree.

One of the least thought methods to make $40,000 in through investing.

What Jobs Pay $40,000 a year?

Especially, since many people consider that you need big money to start investing.

What if I told you that there is no need for big money to start?

Here is a short video on how you can start turning in big profits for as low as $10.

Alternative Ways to Make $40,000 a year

There is this recession proof method to make money you should know about.

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Download My Free 2022 Excel Hourly Pay Calculator

With my Hourly Pay Calculator, you will be able to answer question like:

  • $25 an hour is how much a year
  • 25 dollars an hour is how much a year

FINAL THOUGHTS on 40k a year Is How Much an Hour

We showed you how 40k a year translates into an hourly rate.

State by state comparison shows which places may be the most fitting for young people to start building their financial independence.