40000 a year is how much an hour

40000 a year is how much an hour

A yearly salary of $40,000 converts to an approximate hourly wage of $20 per hour.

If you work 40 hours a week and take 2 weeks of vacation per year, you work 2000 hours per year.

$40,000 / 2000 hours = $20 / hour

How to do the mental math calculation

A quick way to convert a yearly salary to an hourly rate in your head = Divide the salary by 2 and cross out 3 zeros aka divide by 1000.

  • So $40,000 = $20,000.
  • Then cross out 3 zeros = $20,000 and you get $20
  • Let’s try it again. $100,000 / 2 = $50,000.
  • Cross out 3 zeros and you get $50 per hour!
  • Viola it’s that easy.

You can also do the mental math the other way from an hourly rate to a yearly salary.

  • $20 per hour * 2 = $40
  • Then add 3 zeros to get $40,000.

What’s your after tax hourly rate?

At an annual income of $40,000 you’ll pay about 11% in federal and state income tax. That will change sligthly depending on which state you live in or if you’re lucky enough to live in a state without income tax.

You’ll also pay about 8.25% in social security and medicare taxes.

  • Federal and State Taxes = $20 * 11% = $2.2
  • Social Security and Medicare = $20 * 8.25% = $1.65
  • Total taxes ~ $3.85
  • Your after tax hourly wage ~ $16.15

Looking for a more accurate calculation? Check out one of my favorite tools, the paycheck calculator over at smartasset.com

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