Bonus Tax Calculator
How much of my bonus will I actually take home?
Bonuses are taxed differently than regular pay. Estimate your payout.
Preview Your Net Bonus Before Payday
Estimate withholding impact from federal, FICA, state taxes, and optional 401(k) deferral.
Use this for
- Bonus payout planning
- 401(k) bonus deferral decisions
- Withholding method comparisons
You will get
- Estimated take-home bonus
- Tax component breakdown
- Effective withholding rate
Quick Result
Estimated net bonus
$3,267.50
You keep 65.3% of gross
Based on
- • Gross bonus: $5,000.00
- • Salary baseline: $75,000.00
- • Method: Flat 22%
Bonus Details
Required for accurate FICA and tax bracket estimation.
Tax Settings
Most employers use the flat 22% method for separate bonus checks.
Estimated Net Bonus
You keep 65.3% of your gross bonus.
Where the Money Goes
Detailed Breakdown
This tool is for illustrative purposes only and does not constitute professional financial, tax, or legal advice. Calculations are estimates and may not reflect real-world variables or local regulations. Always consult with a qualified professional before making financial decisions.
Methodology and Trust
Formulas
Taxable bonus
taxableBonus = grossBonus - retirementDeduction
Federal withholding
federal = flat22% or marginalRate × taxableBonus
FICA
fica = socialSecurity + medicare (+ additional medicare if applicable)
Net bonus
netBonus = grossBonus - retirementDeduction - federal - fica - stateTax
Why Did My Bonus Disappear?
Key Insights & Concepts
Congratulations on the bonus! But brace yourself: the number on your check will likely be much smaller than you expect. Many employees feel "robbed" when they see nearly 40% of their bonus vanish before it hits their bank account.
The good news? You aren't actually losing that money forever. The IRS just has a special way of withholding it upfront.
The "Supplemental Wages" Rule
The IRS classifies bonuses, commissions, and severance pay as "Supplemental Wages." Unlike your regular salary, which uses the W-4 brackets to estimate your tax, supplemental wages often trigger a flat withholding rate.
The Flat 22% Method
For most bonuses under $1 million, employers simply withhold a flat 22% for Federal Income Tax.
Add in:
+ 6.2% Social Security
+ 1.45% Medicare
+ 5-10% State Tax (depending on where you live)
= ~35-40% Total Withholding
Flat 22% vs. Aggregate Method
Employers have two ways to calculate tax on your bonus. You usually don't get to choose, but it helps to know which one they used:
- Percentage Method (Most Common): Your bonus is separated from your regular pay, and taxed flat at 22%. This is often better for high earners whose marginal tax rate is effectively 24% or 32%, meaning you are actually under-withholding and might owe tax later.
- Aggregate Method: Your employer adds the bonus to your regular paycheck and taxes the total amount as if that is your normal paycheck for every pay period. This often pushes you into a huge phantom tax bracket, causing massive over-withholding. (Don't worry, you get the excess back as a refund next April).
The Million Dollar Rule
If you are lucky enough to receive more than $1 million in supplemental wages during a single year, the mandatory withholding rate jumps from 22% to 37% on every dollar over the million mark.
Strategy: Shielding Your Bonus
If you want to keep more of your bonus, you can't change the tax (FICA/Medicare are mandatory), but you can defer the income tax:
- The 401(k) Maneuver: Ask your HR department if you can change your 401(k) contribution rate specifically for the bonus run. Setting it to 50% or even 80% (up to the annual limit) shields that money from Federal and State income tax instantly.
- HSA Contribution: Similarly, you can contribute a lump sum to your Health Savings Account, which is triple-tax-advantaged.
Will I Get a Refund?
Maybe. If your actual effective tax rate for the year is only 15%, but they withheld 22% on your bonus, you overpaid by 7%. The IRS will return that 7% to you as a tax refund when you file in April.
Conversely, if your effective tax rate is 32% but they only withheld 22%, you might owe money at tax time. It's wise to set aside some cash if you are a high earner receiving a large bonus.
Combine this result with the total compensation calculator, compensation package calculator, and total target compensation calculator for full-offer analysis.