Is $40,000 a Good Salary?

Updated · May 11, 2022

Can you live comfortably on $40,000 a year?

Well, it depends on your job, lifestyle, where you live, the size of your household, etc. For some, $40k would be just enough to get by.

You'd be able to pay your rent or mortgage, utilities, groceries, and transportation costs. That said, you might have to cut back on some discretionary expenses.

Let's see which factors determine whether $40,000 is a good salary or not.

How Much an Hour Is $40,000 a Year?

To help you understand how much $40k is, we break down your earnings into smaller parts.

$40,000 a year is about $3,333 a month, $769.23 a week, and $19.23 an hour. You might also get paid biweekly. In that case, you’d receive $1,538.

Note that these calculations are for an 8-hour workday, five days a week. If you’re working 37 hours a week, for example, $40k a year is $20.79 an hour.

In addition, the amount you get after taxes will be different in every state. Typically, you have to pay federal, state, social security, and medicare tax.

The percentages vary by state. The lowest average tax rate is 15.4% in Florida, Nevada, Texas, New Hampshire, South Dakota, Tennessee, and Wyoming. The highest rate is 23% in Oregon.

If you live in New York, for example, you’d be taxed 20.3% or $8,101. This means you’ll receive $31,899 a year. That said, even within a single state, taxes can vary. In New York, they can be as high as 26%.

You’re also entitled to different deductions to lower your taxable income. Check what these are for you to increase your net pay.

Can You Live Off of $40K a Year?

The average person in the US makes more than $40,000. In fact, the median family income for 2021 was almost double that amount—$79,900 per year.

Even if you live on your own, you’d still be below the mid-point. The median individual income for 2021 was $1,010 per week. With 40k, you’d make $769.23 a week.

So, while it's possible to live off of a $40,000 salary, it would be difficult. Let’s see what you can do with $40k a year.

What Can You Afford on a $40,000 Salary?

Financial experts recommend following the 28/36 rule when you’re calculating your expenses. This means you can spend up to 28% of your total income on housing. If you have debt, this percentage increases to 36% for housing and debt.

Keep in mind that it is one of the indicators lenders use to estimate your financial situation.

Of course, this is just a guideline, so there is some wiggle room. Still, it’s a good idea to stick to it to be able to live comfortably.


When it comes to rent, make sure it isn’t more than one-third of your monthly gross income. That way, it won’t put a strain on your finances.

So, with a $40k salary, you could afford to spend up to $1,111 per month on housing. Keep in mind that this is just an estimate, though. Your actual budget may be even less depending on your other expenses.

If you follow more rigorous guidelines, you’d spend around 25% (or $833) and save the rest.


Can you buy a house if you’re making $40k a year? Technically, yes, but it depends on many factors.

The first one is where you live. In a state like New York, where the costs of living and properties are through the roof, you probably won’t be able to afford it.

Second, it depends on the down payment you can make. It can be as little as $5,000 but we wouldn’t recommend that.

With this amount, the monthly payment and interest rate on your mortgage will be very high. It might be worth saving for a bigger down payment first.

Next, you need a good credit score to qualify for a mortgage in the first place. A high credit score will lower your interest rate, too.

So, with $40,000 a year, a $5,000 down payment, and an average credit score, you would be able to buy a $140,000 home.

However, that’s a very rough estimate. If you have debt, for example, the price of the house you can afford will be lower.


Remember the 28/36 rule? If you want to buy a house, your debt plus your mortgage shouldn’t exceed 36%.

Knowing this, you can calculate the mortgage payment you can afford after you pay your monthly debt.

The same goes for rent. If you have debt, you need to make sure the two don’t exceed 36% of your monthly income.

What Is a Good Salary for a Single Person?

Is $40,000 a good salary? It depends on your field of work. For example, anesthesiologists’ average salary is $404,000 per year, while retail salespersons earn $30,940 on average.

So, $40,000 for a sales job is a decent salary. But that same amount wouldn’t be satisfactory for an anesthesiologist.

In addition, your income depends on your level of experience, the company you’re working for, and the state in which it operates.

But is $40k a year good for a single person to live off comfortably?

This question is difficult to answer since everyone's definition of comfortable is different. Still, it is possible to get by on this salary if you’re willing to make some sacrifices.

Best US Cities to Live on $40K a Year

There are many different factors to consider when deciding where to live. The cost of living and the tax rate are among the main ones.

Based on that criteria, we chose nine cities where $40k a year is good for one person.

  • Lincoln, Nebraska

Lincoln has a population of 294,653 and a cost of living that is 7% below the national average. The city also has a very low tax rate, with a sales tax of only 7.25%.

  • Sioux Falls, South Dakota

Sioux Falls is the largest city in South Dakota, with a population of 117,117. The cost of living in Sioux Falls is 6% below the national average, and the sales tax is only 6.5%.

  • Huntsville, Alabama

Huntsville is a city of 196,219 in Northern Alabama. The cost of living in Huntsville is 5% below the national average, and the sales tax is 9%.

  • Oklahoma City, Oklahoma

Oklahoma City is the capital of Oklahoma and the largest city in the state, with a population of 643,692. The cost of living in Oklahoma City is 15% below the national average. $40k a year is a good salary with such low prices. The sales tax is 8.63%.

  • Omaha, Nebraska

Omaha is the largest city in Nebraska, with a population of 475,862. The cost of living in Omaha is 8% below the national average, and the sales tax is only 7%.

  • Midland, Texas

Midland is a city of 138,549 in west Texas. The cost of living in Midland is 4% below the national average, and the sales tax is 7%.

  • Des Moines, Iowa

Des Moines is the capital of Iowa and the largest city in the state, with a population of 215,636. The cost of living in Des Moines is 10% below the national average, and the sales tax is 7%. Best of all, housing costs are 17% below the national average. This means you could save more of your $40k salary.

  • Wichita, Kansas

Wichita is a city of 389,877 in Kansas. The cost of living in Wichita is 8% below the national average, and the sales tax is 7.5%.

  • Nashville, Tennessee

Nashville is the capital of Tennessee and the second-largest city in the state. Its population is 692,587. The cost of living in Nashville is 3% below the national average, and the sales tax is 9.25%.

How to Live on $40,000 a Year?

Living on $40k a year can be difficult, but it's doable if you're willing to make some sacrifices. Here are a few tips to help you out.

1. Pay Off Your Debt as Quickly as Possible

The first step is to get rid of your debt. It’s a huge strain on your budget, and it lowers the amount you can afford to spend on housing. Paying it off will free up more money to save or spend on other things.

2. Create a Budget and Stick To It

It's important to track your money. Calculate your $40,000 salary after taxes and your monthly expenses. Then, make sure your spending doesn't exceed your income.

3. Make Wise Choices When It Comes to Spending

Spend your money wisely. There are many ways to budget with a low income. Buy more durable or second-hand items, look for deals and discounts, and so on.

4. Try to Increase Your Income

You can take a course to improve your skills and make an extra effort at work so you can get a promotion. Alternatively, you can start a side hustle or find a way to make money from your hobbies.

Wrap Up

Is $40,000 a good salary?

It’s below the median income in the US. Even though you’ll have to make some sacrifices, you can live comfortably with it.

With the right budgeting and planning, you might even be able to buy a house.

Aleksandra Yosifova
Aleksandra Yosifova

With an eye for research, Aleksandra is determined to always get to the bottom of things. If there’s a glitch in the system, she’ll find it and make sure you know about it.