Bonus Tax Calculator
Estimate the withholding on your bonus using the IRS flat-rate method.
Your bonus
Bonuses/commissions already paid this year, before this one.
Leave at 0 if your state has no income tax or you're unsure.
Net bonus after withholding
$3,517.5
Federal withholding (22%/37%)
$1,100
FICA (7.65%)
$382.5
State withholding
$0
Estimate calculated from the numbers you entered. This is not financial, tax, or legal advice — always consult a qualified professional before making significant financial decisions.
How the Bonus Tax Calculator works
This tool applies the IRS flat-rate withholding method for supplemental wages — 22% up to $1 million in supplemental wages for the year, 37% above that — plus standard FICA, to estimate your net bonus.
The key thing to understand before reading the result: this is withholding, not tax. Your bonus is ordinary income taxed at exactly the same rates as your salary. The 22% figure is just what your employer sends the IRS upfront on your behalf, and it gets reconciled against your real liability when you file.
- First slice — 10%
- Next slice — 12%
- Next slice — 22%
- The raise — 24%
The formula
Net bonus = bonus − (22%/37% federal) − (7.65% FICA) − (state rate)The 37% rate applies only to the portion of your cumulative supplemental wages for the year above $1 million — not to the whole payment. FICA is Social Security (6.2%) plus Medicare (1.45%). State withholding varies widely: several states have no income tax at all, while others set their own flat supplemental rate, so this calculator takes it as an input rather than guessing.
Worked example
A $15,000 bonus in a state with no income tax, with no other supplemental wages this year: federal withholding is $15,000 × 22% = $3,300, FICA is $15,000 × 7.65% = $1,147.50, and the net is $10,552.50. That's an effective withholding of about 29.65% — which is why a bonus so often lands smaller than expected.
Now the threshold case. Someone who has already received $980,000 in supplemental wages gets a further $50,000 bonus. Only $30,000 of it sits above the $1 million line, so federal withholding is ($20,000 × 22%) + ($30,000 × 37%) = $4,400 + $11,100 = $15,500 — not $18,500, which is what applying 37% to the whole payment would wrongly produce.
Common mistakes
- Believing bonuses are taxed at a special higher rate. They aren't — only the withholding differs.
- Treating the 22% withheld as money gone. If your marginal bracket is 12%, much of it comes back as refund.
- Spending the gross figure. Budget from the net, not from the number in the announcement email.
- Applying 37% to an entire large bonus instead of only the portion above $1 million.
- Forgetting state withholding, which in some states is a flat supplemental rate applied on top of everything above.
What this calculator simplifies
FICA is applied here as a flat 7.65%. In reality the Social Security portion stops once your wages for the year pass the annual wage base, and an Additional Medicare Tax of 0.9% kicks in above $200,000 of wages. Both effects only matter for high earners, but if you're near either line, treat the FICA figure as an approximation. The result is also a withholding estimate, not a prediction of your final tax bill — that depends on your total income, deductions, and credits for the year.
Frequently asked questions
Why is my bonus taxed at a flat 22%?
The IRS lets employers withhold federal income tax on bonuses (and other "supplemental wages") using a flat percentage method instead of your regular W-4 withholding — 22% on amounts up to $1 million per year, 37% above that. This is a WITHHOLDING rate, not your final tax rate; your actual liability is settled when you file, based on your total income and marginal bracket.
Will I get some of that withholding back?
Possibly. If 22% is higher than your actual marginal tax bracket, you'll get the difference back as part of your tax refund. If your marginal bracket is higher than 22% (common for higher earners), you may owe more at filing time instead. The withholding is just an estimate collected upfront.
Does my employer have to use the flat 22% rate?
No — employers can also use the "aggregate method," combining your bonus with your regular paycheck for that pay period and withholding based on your W-4 as if it were all regular pay. This often withholds MORE than the flat method for a large bonus, since it can temporarily push the combined pay into a higher withholding bracket for that one paycheck.
Is a bonus taxed at a higher rate than my salary?
No. This is the most persistent myth about bonuses. A dollar of bonus and a dollar of salary are taxed identically on your return — both are ordinary income. What differs is only how much your employer holds back upfront. The 22% flat withholding just tends to be visibly different from your normal paycheck withholding, which makes it feel like a penalty.
Does FICA come out of my bonus too?
Yes — Social Security (6.2%) and Medicare (1.45%) apply to bonuses exactly as they do to regular wages, which is the 7.65% this calculator subtracts. Unlike the federal income tax portion, FICA is not refundable at filing time; it's a real, permanent cost, not a prepayment.
Can I reduce the tax on my bonus?
You can't change the withholding method your employer uses, but you can reduce the taxable amount. Directing part of the bonus into a Traditional 401(k), an HSA, or deferred compensation (where your employer allows it) lowers your taxable income for the year. Some employers let you specify a higher 401(k) deferral percentage for bonus payments specifically — worth asking before the bonus is processed, since it usually can't be changed afterward.
What does the $1 million threshold actually apply to?
It applies to your cumulative supplemental wages for the calendar year, not to a single payment. Once your combined bonuses, commissions, and similar payments pass $1 million, only the portion above that line is withheld at 37% — the part below it stays at 22%. That's why this calculator asks what you've already received in supplemental wages this year.
What actually moves this number
Specific levers, and roughly what each one is worth. Not “save more” — the things that change the figure above by an amount you can measure.
Expect a bill if your marginal rate is above 22%
The flat supplemental withholding rate is 22% up to $1 million. In the 32% bracket a $20,000 bonus is under-withheld by roughly $2,000 federally before state tax. Set that aside in January rather than discovering it in April.
Ask whether the bonus can go into the 401(k)
Many plans allow a separate deferral election for bonuses. Routing part of it defers the tax and gets money invested that would otherwise have been spent — the single easiest large contribution most people can make in a year.
Check for a December-versus-January choice
If your employer offers any flexibility on timing and you expect a materially different bracket next year, moving the payment across the year boundary is worth asking about. It is rarely offered and occasionally granted.
Remember FICA still applies
Bonuses are wages. Social Security applies until your year-to-date wages pass $184,500, and Medicare applies with no cap. A bonus paid early in the year is taxed differently from the same bonus paid in December for exactly this reason.
What this calculator does not cover
Every calculator simplifies, and the useful thing is knowing exactly where. These are the specific gaps between this estimate and your real situation:
- The 22% flat rate is a withholding convention, not your tax rate. What you actually owe is settled on your return against your marginal bracket, and the difference can be substantial in either direction.
- Employers may instead use the aggregate method, which combines the bonus with regular wages and withholds at the resulting rate. Your employer chooses; you do not.
- State supplemental withholding rules vary and are not modeled.
- FICA applies to bonuses in the normal way, on top of income tax withholding.
For anything that turns on an exact figure, use the primary sources below or a qualified professional. How these limits are decided and disclosed is described in the editorial standards.