It’s no secret that many people are struggling to make ends meet. In fact, according to the U.S. Census Bureau, over 37.2 million Americans were living in poverty in 2020. $20,000 a year is how much an hour, and how does it compare to the poverty line?
The current poverty threshold is an annual income of $12,760 for a single person, and $26,200 for a family of four. However, the cost of living can vary greatly from state to state. So, $20,000 a year is how much an hour, and is it a livable wage in your case?
$20,000 a Year Is How Much an Hour Before Taxes?
Let’s assume you work 40 hours per week. If you make $20,000 a year, your hourly wage is $9.62. That’s before taxes are taken out of your paycheck. It’s just 2.37 dollars above the federal minimum wage, and lower than the minimum wage in about half of the states.
While it may not be a poverty level wage for a single person, it’s still a tight budget. It places you in the lowest-paid 10% of workers in the United States. And if you have a family to support, $20,000 a year is how much an hour? It may not be enough to cover basic expenses.
How Much Is $20,000 a Year After Taxes?
The federal government requires all workers to pay Social Security and Medicare taxes, which are also known as FICA taxes. The current rate for these taxes is 15.30%, half of which is covered by the employer, while the other half is taken out of your paycheck. This means that 7.65% of your paycheck goes towards FICA taxes.
That’s not all. There are also income taxes imposed by the federal government, the state, and the city. The income tax rate depends on your filing status and the amount of money you make. Assuming you’re a single filer, and you make $20,000 a year, your tax rate is 12%.
Without delving deep into the calculations, your take-home salary will be about $15,852 per year and $7.62 per hour. $20,000 a year is how much an hour after taxes in your case? If your tax situation is different, you can get the accurate numbers using an online paycheck calculator.
$20,000 a Year Is How Much Weekly, Biweekly, and Monthly?
There are 52 weeks in a year. Your yearly salary of $20,000 is the same as $384.62 per week, $769.23 every two weeks, or $1,666.67 per month. After taxes, your take-home pay will be:
- $304.85 weekly;
- $609.62 biweekly;
- $1,321 monthly.
What Jobs Pay $20,000 a Year?
So, $20,000 a year is how much an hour? We’ve established that it’s about $9.62, so we can do some research and find examples of jobs that actually pay this salary. They’re mostly low-skilled jobs that don’t require a college degree. Here are some examples:
- security guard;
- retail sales associate;
- restaurant server;
They won’t always make as little as $20,000 a year. In fact, some of these jobs can actually pay quite well. For example, a retail sales associate at Nordstrom can make up to $15 per hour, and a server at The Cheesecake Factory can make up to $22 per hour.
Is $20,000 a Year ($9.62 Per Hour) a Living Wage?
The answer to this question may depend on the cost of living in your area, but on average, it’s not. According to the MIT Living Wage Calculator, it’s below the living wage even in states with the lowest cost of living, such as Mississippi, Oklahoma, Arkansas, Kansas, and Missouri.
In those states, the poverty threshold is lower than the minimum wage, so a person making $20,000 a year wouldn’t be classified as poor. Still, they’d be struggling to make ends meet. One solution would be to cut down on housing costs by sharing an apartment or house with roommates.
If you live in a more expensive state, such as California, New York, or Hawaii, the cost of living is much higher. $20,000 a year is how much an hour compared to the poverty line in those states? If you tried to live with a partner on one salary of $20,000, you’d be making almost exactly the same as the poverty threshold in Hawaii. In the other two states, your wage is slightly higher than that threshold.
How to Make Ends Meet on $20,000 a Year?
If you’re struggling to make ends meet on $20,000 a year, there are a few things you can do to cut down on your expenses.
- Make a budget and stick to it. This will help you figure out where your money is going and where you can cut back.
- Cut down on unnecessary expenses, such as dining out, entertainment, and shopping.
- Look for ways to increase your income, such as getting a second job or taking on freelance work.
The Bottom Line: If You Make $20k a Year, It May Be Close to Poverty
$20,000 a year is how much an hour? It’s $9.62 before taxes. Living on that is not easy, but it’s possible if you’re willing to make some sacrifices. If you’re struggling to make ends meet, take a close look at your budget and see where you can cut back. You may also want to look for ways to increase your income.
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