Is Making $85,000 a Year a Good Income?

Whether an annual income of $85,000 is considered good depends significantly on various personal and economic factors. While it may appear substantial, its actual value and the lifestyle it supports are highly subjective. This income level’s impact on an individual’s financial well-being is shaped by where they live, their financial obligations, and their take-home pay. The perceived “goodness” of this income is a highly individualized assessment.

The Role of Location and Cost of Living

Geographical location profoundly influences the purchasing power of an $85,000 annual income. Major metropolitan areas and coastal regions often feature significantly higher costs for essential living expenses compared to suburban or rural settings. Housing costs, whether for rent or a mortgage, vary dramatically across the United States. In some areas, $85,000 might comfortably cover housing, while in others, it could barely afford a modest apartment.

Beyond housing, the cost of daily necessities like groceries and utilities also fluctuates by region. The average monthly grocery bill for one person can range from approximately $239 to $529. Similarly, average monthly utility expenses, including electricity, natural gas, water, and internet, typically fall within a range of $380 to $590 per month for a household. Transportation costs, encompassing car payments, fuel, insurance, or public transit, also differ considerably, with average household spending around $819 to $1,098 per month. These wide variations mean an $85,000 income could provide a comfortable standard of living in a lower-cost area but might feel strained in a high-cost urban environment.

Personal Financial Factors

Individual circumstances and financial commitments play a substantial role in determining how adequate an $85,000 income truly is. Household composition, for example, makes a significant difference; a single individual typically has more discretionary income than someone supporting a family, including a spouse, children, or other dependents. Each additional dependent introduces new expenses related to food, healthcare, education, and general upbringing.

The presence and amount of existing debt also heavily influence disposable income. Many individuals carry student loan debt, with average monthly payments estimated to be around $500 to $536. Car loan payments can also consume a significant portion of income, averaging $745 per month for new vehicles and $521 for used ones. Credit card debt and other personal loans further reduce the money available for daily living and savings.

Health-related expenses represent another variable cost that can impact an individual’s budget. The average yearly out-of-pocket healthcare cost for employees can exceed $1,100, not including health insurance premiums. These costs can be unpredictable and may significantly strain finances, especially in cases of chronic conditions or unexpected medical emergencies. Beyond these obligations, personal lifestyle choices, such as frequent dining out, expensive hobbies, or regular travel, also shape how an $85,000 income supports an individual’s desired quality of life and ability to achieve financial goals like saving for a down payment or retirement.

Understanding Your Take-Home Pay

An annual income of $85,000 typically refers to gross income, which is the amount earned before any deductions are applied. Various mandatory and optional withholdings significantly reduce this figure, resulting in a lower net, or “take-home,” pay. This net amount is what is actually available for daily expenses and savings.

One of the largest deductions is federal income tax, which is calculated based on a progressive tax system. This means different portions of taxable income are taxed at increasing rates, as outlined by federal tax brackets. For the 2025 tax year, there are seven federal tax rates ranging from 10% to 37%. Beyond federal taxes, state and local income taxes may also apply, depending on the jurisdiction of residence, further reducing gross pay.

FICA taxes, which fund Social Security and Medicare, are also withheld from earnings. For 2025, the Social Security tax rate is 6.2% on wages up to $176,100, while the Medicare tax rate is 1.45% on all wages, with an additional 0.9% for higher earners. Other common deductions include health insurance premiums, which are often automatically withheld from paychecks. Many individuals also choose to contribute to retirement accounts like a 401(k), with average employee contribution rates around 6.6% to 8.0% of their pay. Additional pre-tax deductions, such as contributions to Flexible Spending Accounts (FSA) or Health Savings Accounts (HSA), can also reduce taxable income and, consequently, net pay.

Comparing Your Income

Placing an $85,000 annual income within the broader economic landscape provides a valuable statistical perspective. The national median household income in the United States was approximately $80,610 in 2023. Comparing this, an $85,000 income is slightly above the median for households, which often include multiple earners.

When looking at individual earnings, the median individual income for all workers in the United States was around $50,200 in 2024. For full-time, year-round workers, the median annual earnings were higher, at about $60,070 in 2022 and $62,088 per year based on median weekly wages in Q1 2025. Therefore, an $85,000 income generally places an individual significantly above the national median for single earners.

These comparative figures offer a statistical benchmark, but they do not fully capture the nuance of personal financial situations. Median incomes can vary based on factors such as age, education level, industry, and years of experience. While an $85,000 income ranks favorably against these national averages, its adequacy remains tied to the specific financial realities and aspirations of each individual.