# \$120 an Hour is How Much a Year? Before and After Taxes

With the cost of living on the rise, a high hourly wage is more important than ever. ** \$120 per hour ** may sound like an astronomical amount to some, but when converted to yearly salary, it may not go as far as you’d think. In this article, we’ll break down exactly how much you can expect to earn annually on \$120 an hour. We’ll look at yearly, monthly, biweekly, and weekly earnings for both part-time and full-time work. We’ll also explore how taxes impact your take-home pay.

Additionally, we’ll discuss whether \$120 an hour is considered a good salary, what types of jobs pay this rate, and whether it’s feasible to live on this wage. With inflation causing prices to surge, we’ll look at how the buying power of \$120 an hour has changed over time. Finally, we’ll provide tips on how you can increase your earnings to maximize your income potential. By the end, you’ll understand the true value of \$120 per hour and how far it can reasonably stretch in covering your living expenses.

## Convert \$120 Per Hour to Weekly, Monthly, and Yearly Salary

Input your wage and hours per week to see how much you’ll make monthly, yearly and more.

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### \$120 an Hour is How Much a Year?

If you make \$120 an hour, your yearly salary would be \$249,600. We calculate your annual income based on 8 hours per day, 5 days per week and 52 weeks in the year.

Hours worked per week (40) x Hourly wage(\$120) x Weeks worked per year(52) = \$249,600

### \$120 an Hour is How Much a Month?

If you make \$120 an hour, your monthly salary would be \$20,800. We calculated this number by dividing your annual income by 12 months.

Hours worked per week (40) x Hourly wage(\$120) x Weeks worked per year(52) / Months per Year(12) = \$20,800

### \$120 an Hour is How Much Biweekly?

If you make \$120 an hour, your biweekly salary would be \$9,600.

Hours worked per week (40) x Hourly wage(\$120) x 2 = \$9,600

### \$120 an Hour is How Much a Week?

If you make \$120 an hour, your weekly salary would be \$4,800. Calculating based on 5 days per week and 8 hours each day.

Hours worked per week (40) x Hourly wage(\$120) = \$4,800

### \$120 an Hour is How Much a Day?

If you make \$120 an hour, your daily salary would be \$960. We calculated your daily income based on 8 hours per day.

Hours worked per day (8) x Hourly wage(\$120) = \$960

## \$120 an Hour is How Much a Year?

The basic formula to calculate your annual salary from an hourly wage is:

Hourly Rate x Hours Worked per Week x Number of Weeks Worked per Year = Annual Salary

So for a \$20 per hour job:

\$120 per hour x 40 hours per week x 52 weeks per year = \$249,600

However, this simple calculation makes some assumptions:

• You will work 40 hours every week of the year
• You will not get any paid time off

Therefore, it represents your earnings if you worked every week of the year, without any vacation, holidays, or sick days.

Accounting for Paid Time Off

The \$249,600 base salary does not yet factor in paid time off (PTO). Let’s assume the job provides:

• 2 weeks (10 days) paid vacation
• 6 paid holidays
• 3 paid sick days

This totals 19 paid days off, or nearly 4 weeks of PTO.

Importantly, this paid time off should not be deducted from the annual salary, since you still get paid for those days.

So with 4 weeks PTO, the annual salary would remain \$249,600 .

## Part time \$120 an hour is How Much a Year?

Your annual income changes significantly if you work part-time and not full-time.

For example, let’s say you work 25 hours per week instead of 40. Here’s how you calculate your new yearly total:

\$120 per hour x 25 hours per week x 52 weeks per year = \$156,000

By working 15 fewer hours per week (25 instead of 40), your annual earnings at \$120 an hour drop from \$249,600 to \$156,000.

That’s a \$93,600 per year difference just by working part-time!

Here’s a table summarizing how your annual earnings change depending on how many hours you work per week at \$120 an hour:

Hours Per Week Earnings Per Week Annual Earnings
40 \$4,800 \$249,600
35 \$4,200 \$218,400
30 \$3,600 \$187,200
25 \$3,000 \$156,000
20 \$2,400 \$124,800
15 \$1,800 \$93,600

The more hours per week, the higher your total yearly earnings. But part-time work allows for more life balance if you don’t need the full salary.

## \$120 an Hour With Overtime is How Much a Year?

Now let’s look at how overtime can increase your annual earnings.

Overtime kicks in once you work more than 40 hours in a week. Typically, you earn 1.5x your regular hourly wage for overtime hours.

So if you make \$120 per hour normally, you would make \$180 per hour for any hours over 40 in a week.

Here’s an example:

• You work 45 hours in a Week
• 40 regular hours paid at \$120 per hour = \$4,800
• 5 overtime hours paid at \$180 per hour = \$900
• Your total one Week earnings =\$4,800 + \$900 = \$5,700

If you worked 45 hours each week for 52 weeks, here’s how your annual earnings increase thanks to overtime pay:

\$5,700 per week x 52 weeks per year = \$296,400

That’s \$46,800 more than you’d earn working just 40 hours per week at \$120 an hour.

Overtime can add up! But also consider taxes and work-life balance when deciding on extra hours.

Here’s a table summarizing how your annual earnings change depending on how many hours you work per week at \$120 an hour:

 Overtime hours per work day Hours Per Week Earnings Per Week Annual Earnings 0 40 \$4,800 \$249,600 1 45 \$5,700 \$296,400 2 50 \$6,600 \$343,200 3 55 \$7,500 \$390,000 4 60 \$8,400 \$436,800 5 65 \$9,300 \$483,600 6 70 \$10,200 \$530,400 7 75 \$11,100 \$577,200

## How Unpaid Time Off Impacts \$120/Hour Yearly Earnings

So far we’ve assumed you work 52 paid weeks per year. Any unpaid time off will reduce your total income.

For example, let’s say you take 2 weeks of unpaid leave. That brings your paid weeks down to 50:

Hours worked per week (40) x Hourly wage(\$120) x Weeks worked per year(50) = \$240,000 annual salary

With 2 weeks unpaid time off, your annual earnings at \$120/hour would drop by \$9,600.

The table below summarizes how your annual income changes depending on the number of weeks of unpaid leave.

 Weeks of unpaid leave Paid weeks per year Earnings Per Week Annual Earnings 0 52 \$4,800 \$249,600 1 51 \$4,800 \$244,800 2 50 \$4,800 \$240,000 3 49 \$4,800 \$235,200 4 48 \$4,800 \$230,400 5 47 \$4,800 \$225,600 6 46 \$4,800 \$220,800 7 45 \$4,800 \$216,000

## Key Takeaways for \$120 Hourly Wage

In summary, here are some key points on annual earnings when making \$120 per hour:

• At 40 hours per week, you’ll earn \$249,600 per year.
• Part-time of 30 hours/week results in \$187,200 annual salary.
• Overtime pay can boost yearly earnings, e.g. \$46,800 extra at 45 hours/week.
• Unpaid time off reduces your total income, around \$9,600 less per 2 weeks off.
• Your specific situation and location impacts taxes and PTO.

Knowing your approximate annual salary and factors impacting it makes it easier to budget and plan your finances. The next step is calculating take-home pay after deductions like taxes.

## \$120 An Hour Is How Much A Year After Taxes

Figuring out your actual annual earnings based on an hourly wage can be complicated once taxes are taken into account. In addition to federal, state, and local income taxes, 7.65% of your gross pay also goes to Social Security and Medicare through FICA payroll taxes. So how much does \$120 an hour equal per year after FICA and income taxes are deducted from your gross pay?

Below we’ll walk through the steps to calculate your annual net take home pay if you make \$120 per hour. This will factor in estimated federal, FICA, state, and local taxes so you know exactly what to expect.

### Factoring in Federal Income Tax

Your federal income tax will be a big chunk out of your gross pay. Federal tax rates range from 10% to 37%, depending on your tax bracket.

To estimate your federal income tax rate and liability:

Look up your federal income tax bracket based on your gross pay.

2023 tax brackets: single filers

Tax rate Taxable income bracket Tax owed
10% \$0 to \$11,000. 10% of taxable income.
12% \$11,001 to \$44,725. \$1,100 plus 12% of the amount over \$11,000.
22% \$44,726 to \$95,375. \$5,147 plus 22% of the amount over \$44,725.
24% \$95,376 to \$182,100. \$16,290 plus 24% of the amount over \$95,375.
32% \$182,101 to \$231,250. \$37,104 plus 32% of the amount over \$182,100.
35% \$231,251 to \$578,125. \$52,832 plus 35% of the amount over \$231,250.
37% \$578,126 or more. \$174,238.25 plus 37% of the amount over \$578,125.

For example, if you are single with \$249,600 gross annual pay, your federal tax bracket is 35%.

Your estimated federal tax would be:

\$174,238.25 + (\$249,600 – \$231,251) x 35% = \$180,660.40

So at \$120/hour with \$249,600 gross pay, you would owe about \$180,660.40 in federal income taxes.

### Considering State Income Tax

In addition to federal tax, most states also charge a state income tax. State income tax rates range from about 1% to 13%, with most falling between 4% and 6%.

Key Takeaways

• California, Hawaii, New York, New Jersey, and Oregon have some of the highest state income tax rates.
• Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming don’t impose an income tax at all.
• Another 10 U.S states have a flat tax rate—everyone pays the same percentage regardless of how much they earn.

A State-by-State Comparison of Income Tax Rates

STATE TAX RATES LOWEST AND HIGHEST INCOME BRACKETS
Florida 0% None
South Dakota 0% None
Tennessee 0% None
Texas 0% None
Washington 0% None
Wyoming 0% None
Colorado 4.55% Flat rate applies to all incomes
Illinois 4.95% Flat rate applies to all incomes
Indiana 3.23% Flat rate applies to all incomes
Kentucky 5% Flat rate applies to all incomes
Massachusetts 5% Flat rate applies to all incomes
New Hampshire 5% Flat rate on interest and dividend income only
North Carolina 4.99% Flat rate applies to all incomes
Pennsylvania 3.07% Flat rate applies to all incomes
Utah 4.95% Flat rate applies to all incomes
Michigan 4.25% Flat rate applies to all incomes
Arizona 2.59% to 4.5% \$27,806 and \$166,843
Arkansas 2% to 5.5% \$4,300 and \$8,501
California 1% to 13.3% \$9,325 and \$1 million
Connecticut 3% to 6.99% \$10,000 and \$500,000
Delaware 0% to 6.6% \$2,000 and \$60,001
Alabama 2% to 5% \$500 and \$3,001
Georgia 1% to 5.75% \$750 and \$7,001
Hawaii 1.4% to 11% \$2,400 and \$200,000
Idaho 1.125% to 6.5% \$1,568 and \$7,939
Iowa 0.33% to 8.53% \$1,743 and \$78,435
Kansas 3.1% to 5.7% \$15,000 and \$30,000
Louisiana 1.85% to 4.25% \$12,500 and \$50,001
Maine 5.8% to 7.15% \$23,000 and \$54,450
Maryland 2% to 5.75%  \$1,000 and \$250,000
Minnesota 5.35% to 9.85% \$28,080 and \$171,221
Mississippi 0% to 5% \$5,000 and \$10,001
Missouri 1.5% to 5.3% \$1,121 and \$8,968
Montana 1% to 6.75% \$2,900and \$17,400
Nebraska 2.46% to 6.84% \$3,340 and \$32,210
New Jersey 1.4% to 10.75% \$20,000 and \$1 million
New Mexico 1.7% to 5.9% \$5,500 and \$210,000
New York 4% to 10.9% \$8,500 and \$25 million
North Dakota 1.1% to 2.9% \$41,775 and \$458,350
Ohio 0% to 3.99% \$25,000 and \$110,650
Oklahoma 0.25% to 4.75% \$1,000 and \$7,200
Oregon 4.75% to 9.9% \$3,750 and \$125,000
Rhode Island 3.75% to 5.99% \$68,200 and \$155,050
South Carolina 0% to 7% \$3,110 and \$15,560
Vermont 3.35% to 8.75% \$42,150 and \$213,150
Virginia 2% to 5.75% \$3,000 and \$17,001
Washington, D.C. 4% to 9.75% \$10,000 and \$1 million
West Virginia 3% to 6.5% \$10,000 and \$60,000
Wisconsin 3.54% to 7.65% \$12,760 and \$280,950

To estimate your state income tax:

Look up your state income tax rate based on your gross pay and filing status.

Multiply your gross annual pay by the state tax rate.

For example, if you live in Pennsylvania which has a flat 3.07% tax rate, your estimated state tax would be:

\$249,600 gross pay x 3.07% PA tax rate = \$7,662.72 estimated state income tax

So with \$249,600 gross annual income, you would owe around \$7,662.72 in Pennsylvania state income tax. Make sure to check your specific state’s rates.

### Factoring in Local Taxes

Some cities and counties levy local income taxes ranging from 1-3% of taxable income.

To estimate potential local taxes you may owe:

• Check if your city or county charges a local income tax.
• If yes, look up the local income tax rate.
• Multiply your gross annual pay by the local tax rate.

For example, say you live in Columbus, OH which has a 2.5% local income tax. Your estimated local tax would be:

\$249,600 gross pay x 2.5% local tax rate = \$6,240 estimated local tax

So with \$249,600 in gross earnings, you may owe around \$6,240 in Columbus local income taxes. Verify rates for your own city/county.

### Accounting for FICA Taxes (Social Security & Medicare)

FICA taxes are a combination of Social Security and Medicare taxes that equal 15.3% of your earnings. You are responsible for half of the total bill (7.65%), which includes a 6.2% Social Security tax and 1.45% Medicare tax on your earnings.

In 2023, only the first \$160,200 of your earnings are subject to the Social Security tax

There is an additional 0.9% surtax on top of the standard 1.45% Medicare tax for those who earn over \$200,000 (single filers) or \$250,000 (joint filers).

To estimate your FICA tax payment:

\$160,200 x 6.2% + \$200,000 x 1.45% + \$49,600 x 0.9% = \$13,278.80

So you can expect to pay about \$13,278.80 in Social Security and Medicare taxes out of your gross \$249,600 in earnings.

### Total Estimated Tax Payments

Based on the examples above, your total estimated tax payments would be:

Federal tax: \$180,660.40

State tax: \$7,662.72

Local tax: \$6,240

FICA tax: \$13,278.80

Total Estimated Tax: \$207,841.92

### Calculating Your Take Home Pay

To calculate your annual take home pay at \$120 /hour:

2. Subtract your estimated total tax payments

\$249,600 gross pay – \$207,841.92 Total Estimated Tax = \$41,758.08 Your Take Home Pay

n summary, if you make \$120 per hour and work full-time, you would take home around \$41,758.08 per year after federal, state, local , FICA taxes.

Your actual net income may vary depending on your specific tax situation. But this gives you a general idea of what to expect.

## Convert \$120 Per Hour to Yearly, Monthly, Biweekly, and Weekly Salary After Taxes

If you make \$120 an hour and work full-time (40 hours per week), your estimated yearly salary would be \$249,600 .

The \$249,600 per year salary does not account for taxes. Federal, state, and local taxes will reduce your take-home pay. The amount withheld depends on your location, filing status, dependents, and other factors.

Just now during our calculation of \$120 An Hour Is How Much A Year After Taxes, we assumed the following conditions:

• You are single with \$249,600 gross annual pay, your federal tax bracket is 35 %.
• You live in Pennsylvania which has a flat 3.07% tax rate
• You live in Columbus, OH which has a 2.5% local income tax.

In the end, we calculated your Total Estimated Tax is \$207,841.92 , Your Take Home Pay is \$41,758.08 , Total tax rate is 83.27%.

So next we’ll use 83.27% as the estimated tax rate to calculate your weekly, biweekly, and monthly after-tax income.

### \$120 Per Hour to Yearly, Monthly, Biweekly, Weekly,and Week Salary After Taxes Table

 Income before taxes Estimated Tax Rate Income Taxes After Tax Income Yearly Salary \$249,600 83.27% \$207,841.92 \$41,758.08 Monthly Salary \$20,800 83.27% \$17,320.16 \$3,479.84 BiWeekly Salary \$9,600 83.27% \$7,993.92 \$1,606.08 Weekly Salary \$4,800 83.27% \$3,996.96 \$803.04

### \$120  an hour is how much a year after taxes

Here is the adjusted yearly salary after a 83.27% tax reduction:

• Yearly salary before taxes: \$249,600
• Estimated tax rate: 83.27%
• Taxes owed (83.27% * \$249,600 )= \$207,841.92
• Yearly salary after taxes: \$41,758.08
Hourly Wage Hours Worked Per Week Weeks Worked Per Year Total Yearly Salary Estimated Tax Rate Taxes Owed After-Tax Yearly Salary
\$120 40 52 \$249,600 83.27% \$207,841.92 \$41,758.08

### \$120 an hour is how much a month after taxes

To calculate the monthly salary based on an hourly wage, you first need the yearly salary amount. Then divide by 12 months.

• Yearly salary before taxes at \$120 per hour: \$249,600
• Divided by 12 months per year: \$249,600 / 12 = \$20,800 per month

The monthly salary based on a 40 hour work week at \$120 per hour is \$20,800 before taxes.

After applying the estimated 83.27% tax rate, the monthly after-tax salary would be:

• Monthly before-tax salary: \$20,800
• Estimated tax rate: 83.27%
• Taxes owed (83.27% * \$20,800 )= \$17,320.16
• Monthly after-tax salary: \$3,479.84

Monthly Salary Based on \$120 Per Hour

Hourly Wage Yearly Salary Months Per Year Before-Tax Monthly Salary Estimated Tax Rate Taxes Owed After-Tax Monthly Salary
\$120 \$249,600 12 \$20,800 83.27% \$17,320.16 \$3,479.84

### \$120 an hour is how much biweekly after taxes

Many people are paid biweekly, meaning every other week. To calculate the biweekly pay at \$120 per hour:

• Hourly wage: \$120
• Hours worked per week: 40
• Weeks per biweekly pay period: 2
• \$120 * 40 hours * 2 weeks = \$9,600 biweekly

Applying the 83.27%estimated tax rate:

• Biweekly before-tax salary: \$9,600
• Estimated tax rate: 83.27%
• Taxes owed (83.27% * \$9,600 )= \$7,993.92
• Biweekly after-tax salary: \$1,606.08

Biweekly Salary at \$120 Per Hour

Hourly Wage Hours Worked Per Week Weeks Per Pay Period Before-Tax Biweekly Salary Estimated Tax Rate Taxes Owed After-Tax Biweekly Salary
\$120 40 2 \$9,600 83.27% \$7,993.92 \$1,606.08

### \$120 an hour is how much weekly after taxes

To find the weekly salary based on an hourly wage, you need to know the number of hours worked per week. At 40 hours per week, the calculation is:

• Hourly wage: \$120
• Hours worked per week: 40
• \$120 * 40 hours = \$4,800 per week

Accounting for the estimated 83.27% tax rate:

• Weekly before-tax salary: \$4,800
• Estimated tax rate: 83.27%
• Taxes owed (83.27% * \$4,800 )= \$3,996.96
• Weekly after-tax salary: \$803.04

Weekly Salary at \$120 Per Hour

Hourly Wage Hours Worked Per Week Before-Tax Weekly Salary Estimated Tax Rate Taxes Owed After-Tax Weekly Salary
\$120 40 \$4,800 83.27% \$3,996.96 \$803.04

### Key Takeaways

• An hourly wage of \$120 per hour equals a yearly salary of \$249,600 before taxes, assuming a 40 hour work week.
• After accounting for an estimated 83.27% tax rate, the yearly after-tax salary is approximately \$41,758.08 .
• On a monthly basis before taxes, \$120 per hour equals \$20,800 per month. After estimated taxes, the monthly take-home pay is about \$3,479.84 .
• The before-tax weekly salary at \$120 per hour is \$4,800 . After taxes, the weekly take-home pay is approximately \$803.04 .
• For biweekly pay, the pre-tax salary at \$120 per hour is \$9,600 . After estimated taxes, the biweekly take-home pay is around \$1,606.08 .

Understanding annual, monthly, weekly, and biweekly salary equivalents based on an hourly wage is useful when budgeting and financial planning. Taxes make a significant difference in take-home pay, so be sure to account for them when making income conversions. Use this guide as a reference when making salary calculations.

## What Is the Average Hourly Wage in the US?

Last Updated: Sep 1 2023

US Average Hourly Earnings is at a current level of \$33.82, up from 33.74 last month and up from 32.43 one year ago. This is a change of 0.24% from last month and 4.29% from one year ago.

Average Hourly Earnings is the average dollars that a private employee makes per hour in the US. This metric is a part of one of the most important releases every month which includes unemployment numbers as well. This is normally released on the first Friday of every month. This metric is released by the Bureau of Labor Statistics (BLS).

## What is the average salary in the U.S.?

Last Updated: July 18, 2023

The U.S. Bureau of Labor Statistics uses median salary data rather than averages to avoid skewed numbers from outlying high and low numbers. Median weekly earnings of the nation's 121.5 million full-time wage and salary workers were \$1,100 in the second quarter of 2023, the U.S.

If a person works 52 weeks in the year, then this represents a national annual salary of \$57,200.

## Is \$120 an Hour a Good Salary?

To determine if \$120 an hour is a good salary, it helps to look at some key economic measures. One useful metric is the median household income, which gives an indication of what a typical family earns. According to the most recent Census Bureau data, the median household income in the United States is around \$67,000. Assuming a 40 hour work week and 50 weeks worked per year, this works out to approximately \$33 per hour worked. Using this as a benchmark, \$120 an hour is over 3 times higher than the median household income.

Another helpful data point is the cost of living and how wage levels compare to expenses in different areas. According to the Council for Community and Economic Research, the average cost of living index across all U.S. cities is 100. The cost of living in notoriously high areas like New York City (Manhattan) is 216 and San Francisco is 192. This suggests salaries need to be twice as high in these cities to maintain the same standard of living as the national average. Considering these metrics, \$120 an hour would provide a very comfortable lifestyle in moderately priced areas and a solid middle-class lifestyle in high cost cities.

Overall, while \$120 an hour is well above the median wage and household income, it may not always guarantee economic security depending on cost of living and debt levels. However, it would generally be considered a very good wage relative to local averages across most areas of the country.

## Jobs that pay \$120 an hour

While not common, there are certain jobs that pay over \$100 per hour on average that could meet or exceed \$120 per hour with experience and skill. Here are some of the top jobs with earning potential of \$120 an hour:

• Specialized medical professionals – This includes experienced surgeons, anesthesiologists, radiologists, and other high-demand specialty physicians who are able to command premium salaries. For example, the average salary for a general surgeon is around \$350,000 annually.
• Attorneys – Corporate lawyers, plaintiff attorneys, and partners at large law firms can earn \$250,000+ per year, which works out to over \$120 an hour. However, most lawyers earn far less.
• Specialized engineers – Experienced petroleum, software application, and aerospace engineers with advanced skills can earn \$120 or more. The average annual salary for petroleum engineers is over \$130,000.
• Executive management – C-suite executives like CEOs and CFOs at large corporations or organizations can earn well over \$120 an hour, with average total compensation in the high six figures.
• Financial services – Experienced investment bankers, hedge fund managers, and other financial professionals at the top of their field can have highly lucrative earning potential. The average base salary for an investment banking VP is \$250,000.
• Contractors – Some specialized contractors in high-demand fields like information technology can earn over \$100 per hour, especially those with security clearances needed for government contract work.

For most other professions like teachers, registered nurses, accountants, sales managers, and construction managers, average hourly earnings would fall below the \$120 mark. However, some experienced professionals at the top of their industry in expensive metro areas could potentially exceed this threshold.

## Can You Live Off \$120 An Hour?

While \$120 an hour equates to \$250,000 a year, that level of income doesn’t necessarily guarantee financial security. The cost of living, outstanding debts, and family obligations play a major role. However, for many workers without an excessive amount of debt or financial dependents, a salary of \$120 an hour should be more than sufficient.

Some key considerations include:

• Housing costs – In many areas, housing eats up the largest share of income. The median home price in the U.S. is around \$270,000, which would be affordable on \$120 an hour in most regions outside of pricier coastal markets. Rent costs can also vary, with the average rent for a one bedroom apartment ranging between \$1,000 to \$1,500 depending on location.
• Healthcare/insurance – Even for those covered by employer-provided health insurance, out-of-pocket costs for premiums, copays, deductibles, and medications can add up. On \$120 an hour, premium healthcare costs should still be reasonably affordable.
• Taxes – Federal and state taxes would amount to roughly 25% or more on an income of \$250,000, depending on deductions. While still a large expense, this should be manageable at this income level.
• Debt obligations – Any significant debt like student loans, credit cards, auto loans, and personal loans can offset an otherwise healthy income. Excessive debt limits disposable income that can be saved or used for living expenses.

Overall, \$120 an hour provides a high income level for securely managing essential costs like housing, food, insurance, transportation, and retirement savings for those without major financial obligations. While affording a more luxurious lifestyle in high-cost regions may be challenging, necessities should be comfortably affordable for singles or families at this earnings level.

## The impact of inflation on the value of \$120 an hour

With high inflation currently eroding consumer purchasing power, incomes like \$120 per hour don’t go quite as far today as they used to. U.S. inflation reached 9.1% for the 12 months ending June 2022, the highest rate since 1981 according to government figures. When the costs of groceries, gas, rent, vehicles, and other goods and services rapidly increase, a salary of \$120 an hour sees its real value diminish over time.

Adjusting for an average inflation rate of 5%, \$120 an hour today would be equivalent to:

• \$114 in one year
• \$108 in two years
• \$102 in three years

This demonstrates how the rising costs of living could impact someone earning this wage when raises or pay increases fail to keep up. While \$120 today still provides a high standard of living in most of the country, persistent elevated inflation eats away at purchasing power. Some ways to counteract inflation on a fixed income are reducing discretionary spending, finding value-based alternatives for essentials like groceries and gas, and investing to build assets that appreciate along with inflation. However, minimizing its impact requires continuously monitoring household expenses and budget tradeoffs.

## 5 Ways To Increase Your Hourly Wage

For those currently earning less than \$120 per hour, here are some potential ways to boost your hourly earnings:

• Ask for a raise – If you have performed well and taken on more responsibilities in your current role, negotiate with your manager for a salary bump or cost of living adjustment, especially in times of high inflation.
• Seek promotions – Look for advancement opportunities within your organization that come with higher pay grades. Make your career ambitions known and work to develop skills to equip you for leadership roles.
• Pick up overtime hours – Take on extra hours and shifts when available at your job to benefit from overtime premium pay. At 1.5 times regular wages, 10 overtime hours per week at \$20/hour would bump your base pay by \$300.
• Find a higher-paying job – Explore job openings at other employers that align with your abilities but offer better compensation and earning potential. Be open to relocating if needed.
• Develop specialized skills – Look for skills training, certification programs, online courses, or advanced degrees that qualify you for well-compensated roles in fields like technology, engineering, finance, medicine, and law.

Putting in the time and effort to expand your skill set or take on more responsibility and hours in your work can help substantially increase your hourly earnings over time.

## Buying a car on \$120 an hour

Average new car prices now exceed \$47,000 in the U.S. according to Kelley Blue Book. While that figure may seem daunting, earning \$120 an hour definitely makes buying a respectable new or used vehicle an affordable proposition. Here’s what to consider:

• For a new car, focus on models priced in the \$25,000 – \$40,000 range. Factoring in taxes and fees, a \$40,000 vehicle purchased with a 20% down payment would result in a monthly car note of around \$640 at current interest rates. That should be manageable on \$120 hourly earnings.
• For a used car, aim for a vehicle no more than 2-3 years old with 25,000 miles or less priced at \$20,000 or below. Opt for used certified pre-owned models that include a warranty. Be prepared to pay in cash or finance a maximum of \$15,000 to keep the monthly payments low.
• Run the numbers on total cost including sales tax, registration, and insurance to make sure they align with your budget constraints and savings goals. Insurance will be higher for newer and luxury vehicles.
• Consider your current job security and financial commitments carefully before taking on a large auto loan obligation that eats into your take-home income.

With \$120 hourly income, you can comfortably afford loan payments on an economical new car or pay cash for a great used car while keeping insurance, gas, and maintenance expenses reasonable.

## Can You Buy a House on \$120 An Hour?

As a general rule, you can afford a home that is approximately 3 times your gross annual income. On an hourly wage of \$120, this translates to annual earnings of around \$250,000. Based on the standard 3X guideline, this means you can qualify for purchasing a home valued up to around \$750,000. Of course, factors like your down payment size, existing debts, and mortgage interest rates will impact the loan amount and home price you can manage.

Here are some tips for buying a house if earning \$120 per hour:

• Aim for a 10% to 20% downpayment. On a \$750,000 home, you would need to save \$75k-\$150k for the downpayment to keep monthly costs reasonable. The higher, the better.
• Opt for a 15-year mortgage over 30 years to pay the home off faster if you can afford the higher monthly payment. This results in less interest paid over time.
• Look for homes priced well below your \$750,000 upper limit. In expensive areas, a condo or townhome may be a more affordable option than a single family home. Consider commuting farther from urban job centers to find lower prices.
• Run the numbers on a mortgage calculator to see the impact of interest rate changes on monthly payment amounts before committing. Get pre-qualified to confirm your budget works.
• Keep your “front-end ratio” (housing expenses divided by income) under 28% and “back-end ratio” (total debt payments divided by income) under 36%. This helps ensure your home is truly affordable based on your existing financial obligations.

While earning \$120 per hour provides substantial home buying power, it is still important to be strategic, save for a solid downpayment, and buy well within your means, especially when moving to a high cost area.

## Example Budget For \$120 Per Hour

Earning \$120 per hour equals about \$250,000 annually assuming a 40 hour work week and two weeks of vacation time. After taking out taxes, healthcare, and other pre-tax deductions, let’s assume the annual take-home pay comes out to approximately \$160,000. Here is an example basic monthly budget for this take-home income:

• Housing (incl. taxes, insurance, utilities): \$2,500
• Moderate home price with 20% down payment
• Groceries: \$750
• \$425 per month for one person
• Plus \$150 dining and takeout
• Transportation: \$650
• Car payment: \$400
• Gas, maintenance: \$250
• Health, dental, vision, life
• Retirement Savings: \$1,250
• Max out 401k contribution at \$20,500 per year
• Emergency Savings: \$500
• Discretionary: \$1,000
• Clothing, entertainment, vacations, etc.
• Total Expenses: \$7,150

This budget leaves \$3,350 per month for additional discretionary spending or investments. Costs would need to be adjusted for specific circumstances like family size, debts, where you live, and other obligations. However, this basic budget demonstrates \$120 an hour provides substantial income to cover expenses with plenty left over for goals like retirement and leisure. Those earning this wage should prioritize avoiding lifestyle inflation and overspending.

## In Summary

An income of \$120 an hour can provide financial flexibility and an upper-middle class to wealthy lifestyle in most areas of the country. However, factors like high housing costs or large debts could offset its purchasing power and ability to build wealth, especially supporting a family solely on this income.

Though well above average earnings, \$120 an hour does not make someone “rich” by most standards. Many high-paying jobs require extensive education and experience to reach this compensation level. However, for moderate income households, this earning capability remains aspirational. With proper budgeting and smart financial decisions, a salary of \$120 an hour should afford a very comfortable, secure lifestyle in most cities nationwide.