Please be aware, if you are a US citizen or resident then you will have to report your worldwide income. But it seems you qualify for the Foreign Earned Income Exclusion. If this is the case, your tax rate is calculated with all income and then applied to only the taxable income. Therefore, your tax rate can be higher.
"If you qualify for and claim the foreign earned income exclusion, the foreign housing exclusion, or both, must figure the tax on your remaining non-excluded income using the tax rates that would have applied had you not claimed the exclusion(s)." (IRS)
From your example, the tax rate would be calculated for 120k and then applied to the 40k.
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