A bonus can feel smaller than expected once taxes are withheld. This calculator estimates the take-home amount of a bonus so you know what to actually expect, and explains why bonuses are often withheld at a higher rate than your regular pay.
How bonuses are taxed
Bonuses are considered supplemental wages by the IRS. The most common method is flat withholding: employers withhold federal income tax at a flat 22% on bonuses up to $1 million. On top of that come Social Security (6.2%), Medicare (1.45%), and any state tax — which is why a bonus can arrive with 30% or more withheld.
Withholding is not your final tax
The 22% flat rate is only withholding, not the actual tax you owe. Your bonus is ultimately taxed as ordinary income at your marginal rate when you file. If your marginal rate is below 22%, you get the difference back as a refund; if it is above, you may owe more. Either way, the year-end reconciliation sorts it out.
A worked example
On a $10,000 bonus, flat federal withholding takes $2,200, Social Security takes $620, and Medicare takes $145 — leaving about $7,035 before any state tax. In a state with a 5% income tax, another $500 comes out, bringing take-home to roughly $6,535.
Making the most of a bonus
- Contributing part of a bonus to a 401(k) or HSA can reduce the income tax you ultimately owe on it.
- If your bonus is large, check whether it pushes you into a higher marginal bracket for the year.
- The aggregate withholding method (bonus combined with a regular paycheck) sometimes withholds differently than the flat method — ask your employer which they use.
- Treat the flat 22% as an estimate; your true cost depends on your total annual income and deductions.