There is a job opening in your town that offers a rate of $21 per hour. However, what does this translate to in terms of yearly earnings? This is precisely what we are about to find out.
My aim is to guide you through the process of converting your hourly wage into an annual gross income. Additionally, I will determine the monthly, weekly, and daily amounts that you will receive at this hourly rate. Once we have established those figures, I will also compute your take-home pay after taxes and examine the lifestyle that this level of income can provide.
Let’s do the math!
Contents
$23 An Hour Is How Much a Year?
To determine your annual earnings, we must first work out the total number of hours you will work during that time frame. To do this, we will presume that you work eight hours every day, five days a week, and for the full 52 weeks of the year.
All we have to do is multiply these numbers to get our yearly total of hours worked:
- 8 x 5 = 40
- 40 x 52 = 2,080 total hours.
Now that we have established the total number of hours worked in a year, we can calculate the maximum possible annual income by multiplying this value by our hourly rate of $23:
- 2,080 x $23 = $47,840 per year.
Therefore, our primary question has been answered. Working 40 hours per week for 52 weeks would yield an income of $47,840 per annum.
In reality, most employees will take a minimum of two weeks off work each year. This may be paid or unpaid. Let’s assume it’s unpaid; therefore, to obtain a more precise estimate of annual income when earning $23 per hour, let us subtract 80 hours from the total number of hours worked in a year:
- 2,080 – 80 = 2,000 total hours.
- 2,000 x $23 = $46,000 per year.
Monthly income at $23 an hour
So how much is $23 an hour per month? As most employees get a paycheck every four weeks, we will use this as our monthly measurement rather than a calendar month. First, we need to calculate the number of hours worked per month:
- 4 weeks x 40 hours = 160 hours per month.
Let’s now multiply this by our hourly rate of $23:
- 160 x $23 = $3,680 per month.
Weekly income at $23 an hour
This calculation is straightforward. Since we have presumed a 40-hour workweek, we can easily find the weekly earnings by multiplying this figure by our hourly rate:
- 40 hours x $23 = $920 per week.
Daily income at $23 an hour
This one’s just as simple. We’re doing eight hours work per day. Let’s multiply this by our hourly rate again:
- 8 hours x $23 = $184 per day.
Income after tax at $23 per hour
Although determining your annual gross income is a useful starting point, it does not present an accurate representation of the amount you will actually receive after factoring in tax deductions. Federal income tax, FICA taxes, and state taxes will substantially diminish your earnings. To work out the percentage of your income that will be deducted by the authorities, we will need to perform some more complex calculations.
Federal Income Tax
Out of all the deductions, Federal Income Tax typically has the most substantial impact. To calculate the amount due based on a $23 hourly wage, and assuming you work for the entire 52 weeks of the year, we must refer to the relevant Federal Income Tax brackets and perform the necessary calculations.
With an annual income of $47,840, we can consult the table below, which shows us the related tax brackets for the 2023 tax year:
| 2023 Federal Income Tax Brackets | Tax Rate For Each Bracket | Total Tax Owed In Each Bracket |
$0 to $11,000 | 10% | $0 – $11,000 = $11,000 $11,000 x 0.1 = $1,100 |
$11,001 to $44,725 | 12% | $44,725 – $11,001 = $33,724 $33,724 x 0.12 = $4,046.88 |
$44,726 to $95,375 | 22% | $47,840 – $44,726 = $3,114 3,114 x 0.22 = $685.08 |
Now all we have to do is add the amount due in each tax bracket for our total Federal income tax bill:
- $1,100 + $4,046.88 + $685.08 = $5,831.96 owed in Federal income tax.
FICA Taxes
These are the compulsory contributions you are required to make towards Social Security and Medicare. This will further decrease your income by 7.65%. Let’s do the math once again:
- $47,840 x 0.0765 = $3,659.76 due in FICA taxes.
State Income Tax
Working out your state income tax is a more intricate process. While seven US states do not impose any income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming), the others have either a fixed tax rate or tax brackets with varying rates based on your level of income.
Upon examining the different rates around the country, I can say that if you reside in a state that imposes income tax, you can anticipate paying an average of roughly 4%. Let’s quickly calculate that:
- $47,840 x 0.04 = $1,913.60 due in state income tax.
Overall Tax Owed
| Tax | Amount Due |
| Federal Income Tax | $5,831.96 |
| FICA Taxes | $3,659.76 |
| State Income Tax | $1,913.60 |
| Total | $11,405.32 |
As we can see, once we’ve totaled those three tax bills together, our total tax bill is $11,405.32. All we have to do now to work out our take home annual pay on $23 an hour is deduct this from our gross yearly income:
- $47,840 – $11,405.32 = $36,434.68 net income after tax.
It’s also interesting to know how what this works out as a percentage of your income. To do this, we simply divide the tax bill by the gross yearly income and then multiply the result by 100:
- $11,405.32 / $47,840 = 0.2384
- 0.2384 x 100 = 23.84% of your income is paid in taxes.
Here is a table showing what you will earn after tax per hour, per day, per week, and per month:
| Time Period | Pretax rate | After-tax income minus 24.15% |
| Hourly rate | $23 | $17.52 |
| Daily rate | $184 | $140.13 |
| Weekly rate | $920 | $700.67 |
| Monthly rate (4 Weeks) | $3,680 | $2,802.67 |
| Yearly rate | $47,840 | $36,434.68 |
How Does $23 an Hour Compare to the National Average?
If working full time (40 hours per week, 52 weeks per year), your pre-tax income of $47,840 will place you around the 51st percentile of American incomes. This is, however, well below the average individual income of $66,755. This is the equivalent of earning just over $32 an hour, so you have a way to go before you’re hitting that level.
Quality of life expectations on $23 an hour
Earning $23 hourly can afford you a satisfactory level of comfort, but the extent to which it does so will largely depend on the location and specific circumstances.
In numerous parts of the United States, this income level could offer a reasonable standard of living. It should allow for an affordable home or apartment, dependable transportation, and the ability to enjoy some leisure activities and the odd meal out. Nonetheless, in cities with a high cost of living, think New York City or San Francisco, it would be far harder to live on this income level.
Saving for a rainy day, investing in your retirement fund, and paying off debts is also potentially possible when earning $23 an hour. However, it will require strict budgeting and strategic planning to make sure you don’t overspend on your day to day living costs.
Need to Know More about Your Salary?
If so, check out our in-depth guides on How To Get A Pay Stub, the difference between Gross Pay vs Net Pay, or How Do I Convert Salary To Hourly To Calculate A Part Time Rate.
Or maybe you need to know the difference between Salary vs Hourly Pay, Part Time And Full Time Hours, or find the best Flexible Jobs That Let You Set Your Own Hours available in 2023.
If you’ve got an interview coming up, you might be wondering how to answer the dreaded What Are Your Salary Expectations, How To Answer Desired Salary, or How To Counteroffer Your Salary After A Job Offer?
Final Thoughts
If you’re earning $23 hourly, your income falls below the national average, but it’s a good starting point for many young people. This amounts to a gross income of $47,840 per year if you work 40 hours per week, every week. Of course, with overtime, your earnings could increase beyond this.
After you’ve surrendered the amount owed in taxes, you’ll have around $36,434.68 left to manage as you wish. While this income level will not permit you to live anywhere exclusive, if you’re mindful of your spending, you should be able to make ends meet without too many difficulties in most regions of the country.
Happy earning!
