How Much Is $40,000 A Year Per Hour

Over 130 million people working in the United States are salaried employees. Being paid on salary has its perks, such as a steady and consistent income, but it also has its downfalls. You don’t usually get extra holiday or overtime pay as a salaried employee. So if you have to work more than the standard 40 hours per week to meet a looming deadline, your hourly rate will decrease because your pay is fixed. However, employees usually get benefits like paid time off, which can help boost your hourly rate and balance out the lack of overtime pay.

The salary we’re breaking down today, $40,000 per year, is a fairly common income in the US. However, according to the Bureau of Labor Statistics, it’s signifianctly less than the national average salary of $61,900 a year. If you’re trying to budget and be more conscious of your spending, you may be wondering how much is $40,000 a year per hour. Here’s everything you need to know.

Why Do You Need to Know Your Hourly Rate?

Figuring out your hourly rate can help put your spending into context. When you see something you want like a purse or tech gadget, you’ll be able to calculate exactly how many hours of work and energy that item will cost you. This exercise can help you prioritize your purchases according to your values and spend less money overall.

Knowing your hourly rate is also important if you take on side jobs like freelance writing or contract work. Potential clients will usually ask you what your hourly rate is. Knowing how much you make at your day job before and after tax will help you give your clients an accurate project estimate.

However, it’s important to remember that freelancers have to pay a higher tax rate than employees. They’re responsible for regular income tax and a self-employment tax of 15.3%. Freelancers also have to cover the cost of their own equipment and other business expenses. So don’t just give clients the hourly rate you earn at your day job. Your contract rate should be higher to take into account the added costs of working for yourself, even if freelancing is just a side hustle.

How Much Is $40,000 A Year Per Hour Before Taxes?

Wondering how much is $40,000 a year per hour? If you’re a salaried employee making $40,000 per year, you earn about $20 per hour before tax. Let’s take a closer look at the breakdown of a $40,000 salary.

Daily Salary – Some clients pay freelancers a daily rate instead of an hourly one, so it’s helpful to know how much you make per day at your 9-5 job. If you’re earning $40,000 per year on salary, you’re bringing in about $160 per day before taxes. However, don’t forget to increase your daily freelance rate to account for the added costs of self-employment.
Weekly Salary – Since there are 52 weeks in a year, your weekly pay on a $40,000 salary is $769.23.
Monthly Salary – If you’re looking for your monthly salary, it can vary. Each month has a different number of days and a different breakdown of weeks. If you make $40,000 per year, you earn between $3,076 and $3,333 per month.

What About Taxes?

If you’re wondering how much is $40,000 a year per hour, you probably want to know what your hourly rate is after taxes. A single person earning $40,000 per year falls in the 12% federal income tax bracket. This means that the first $10,275 of your income is taxed at a rate of 10% and the remainder is taxed at 12%. That brings your total tax bill to around $4,590 before any deductions, leaving you with approximately $35,400. This translates to an hourly rate of around $18.50 an hour.

You’ll also have to factor in any state taxes you may owe, which vary depending on where you live. If you’re lucky, you might reside in a state that has no income tax, such as Alaska or Florida. Here’s a helpful article on state income tax rates to help you figure out how much you owe and calculate your after-tax hourly rate.

Factors That Affect Your Hourly Rate

Your hourly, daily, weekly, and monthly salary can be affected by a number of other things as well. The number of days you work during the year, your holiday pay and vacation time all come into play when figuring out your salary breakdown.

Number of Days Worked

Before you can answer how much is $40,000 a year per hour, you need to know how many days you work during the year. Taking away weekends, there are 260 workdays in 2022. If you worked every single one of those days, you would only be making $19.23 per hour. However, employees in some professions work fewer overall days. Most teachers, for example, are only in school 180 days of the year. So a teacher making $40,000 a year would earn $27.77 an hour assuming they worked 40 hours a week.

Paid Holidays and Time Off

Let’s not forget about paid holidays. Depending on your employer ,the number of paid and unpaid holidays may vary. For example, if your company gives you six holidays per year, you would only be making about $19.69 per hour. However, if you have 14 holidays a year, you would be making about $20.33 per hour.

Paid time off is also a huge factor. If you have paid vacation or sick days, the number of working days for the year will be lowered and your hourly rate will increase. So do’t forget to take those vacations days, especially if they expire at the end of the year!

Number of Hours Worked

Salaried employees are expected to work 40 hours per week. However, data from Zippia revealed that the average American works just 34.4 hours each week. So if you often get your work done quickly and log off your work computer early, your hourly rate may actually be higher than your salary suggests.

Unfortunately, the opposite is also true. Your hourly rate decreases if you regularly have to work unpaid overtime to get all your projects done. If you want to know how much you’re truly earning per hour, you should track how many hours you work in an average week.

Ways to Figure Out Your Hourly Pay

If you’re wondering about how much $40,000 per year is hourly, you may be wondering about different annual salaries too. Not everyone makes $40,000 a year, after all. Some people make much more and some make less. If you want to figure out the hourly rate for a different salary, you can visit Convert Units and use the site’s calculator to figure out how much you make.

Photo: blairwang

Where To Hide Money In Your Home, Conversations With A Burglar

Ten Changes I Made To Loose Weight And Save Money

Come back to what you love! Dollardig.com is the most reliable cash-back site on the web. Just sign up, click, shop, and get full cashback!

Amanda Blankenship

Amanda Blankenship is the Chief Editor for District Media. With a BA in journalism from Wingate University, she frequently writes for a handful of websites and loves to share her own personal finance story with others. When she isn’t typing away at her desk, she enjoys spending time with her daughter, son, husband, and dog. During her free time, you’re likely to find her with her nose in a book, hiking, or playing RPG video games.