# \$20 an Hour Is How Much a Year?

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Many industries are reporting labor shortages due to “The Great Resignation” that reached a height at the beginning of 2022. As labor demand goes up, so does the price of labor. With such a demand and companies posting their pay in different ways, it’s helpful to be able to compare hourly wages to other pay methods.

To figure out how much \$20 an hour is per year, multiply \$20 by how many hours you work per week. For most full-time jobs, that’s 40 hours per week or 2,080 hours per year, if you don’t take any time off. That means \$20 an hour is \$41,600 a year.

## What Does \$20 an Hour Look Like for Other Pay Periods?

The table below shows what the gross pay will be for different pay periods if you make \$20 per hour. The figures in this table assume that you didn’t have any time off.

It’s important to remember that gross pay is not the same amount that ends up in your bank account.

## Take-Home Pay After Taxes

Taxes can take a big chunk out of your paycheck, and the amount can vary wildly between individuals, even with the same hourly pay. Here are some taxes you’ll need to be aware of when trying to convert \$20 an hour to an annual salary.

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### Federal Taxes

The United States uses a progressive tax system, which means that, as income goes up, the tax rate goes up. Each individual’s income is broken into brackets, and each bracket has its own rate.

For 2022, the first \$10,275 is taxed at 10%. The next bracket — any income from \$10,275 to \$41,775 — is taxed at 12%. The third tier — \$41,775 to \$89,075 — is taxed at 22%. If you made \$20 an hour (\$41,600 for the year) in 2022, you would pay a total of \$4,786.50.

After taxes, you would have made \$36,813.50 in 2022.

### State Income Taxes

The example doesn’t include state income taxes or other deductions or strategies to lower your tax bill. Most states use a progressive tax system similar to the federal government’s. Nine states use a flat rate:

• Illinois
• Indiana
• Kentucky
• Massachusetts
• Michigan
• North Carolina
• Pennsylvania
• Utah

Some states don’t have any income tax, which may simplify your math. The states that have no income tax:

• Florida
• New Hampshire (taxes dividends and interest)
• South Dakota
• Tennessee
• Texas
• Washington (taxes high capital gains)
• Wyoming
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On the other hand, these are the states (and district) with the highest individual income tax:

1. California (12.3%)
2. Hawaii (11%)
3. New York (10.9%)
4. District of Columbia (10.75%)
5. New Jersey (10.75%)
6. Oregon (9.9%)
7. Minnesota (9.85%)
8. Vermont (8.75%)
9. Wisconsin (7.65%)

### Good To Know

Is \$20 an hour a good wage? “Good” is relative. The median household income in 2021 was \$70,784. That breaks down to \$34 per hour. So \$20 an hour is quite a bit below the median wage.

## Advice for Living on \$20 per Hour

If you are single and live in an area that has a low cost of living, then it might be easy, or even comfortable, for you to live on \$20 an hour. If you live in New York and have a couple of dependents, then \$20 an hour is going to be a struggle.

There may be some situations where \$20 an hour just isn’t going to work and other times when \$20 an hour is almost luxurious. For everyone in between, here are some tips for making living on \$20 an hour a little easier.

A simple option is the 50/20/30 budget — popularized by Sen. Elizabeth Warren. That breaks down your take-home income into 50% for mandatory expenses, 20% for savings and debts and 30% for discretionary spending.

You can find more involved budget advice from experts such as Dave Ramsay or You Need a Budget. If you like having the utmost control, you can make your own budget in Google Sheets or Excel.

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Information is accurate as of Nov. 3, 2022.

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