Bonus Tax Calculator

Why your bonus check looked smaller than expected

A bonus is what the IRS calls a supplemental wage: pay outside your regular salary or hourly rate. Commissions, severance, accumulated sick or vacation pay paid out at once, and taxable awards all fall into the same category. The IRS gives employers two ways to withhold federal income tax on it, and which one your employer picks explains most of the gap between the number on your offer letter and the number that hit your bank account.

Method one: the flat 22% rate

Most employers withhold a flat 22% from a bonus, separate from your regular paycheck's withholding. This exists for the employer's convenience, not yours: running payroll for a bonus does not require knowing your full-year income, your filing status, or anything else about your tax situation. A flat percentage is simple to apply correctly and consistently across an entire workforce.

Once an employee's cumulative supplemental wages for the calendar year pass $1,000,000, the rate on anything above that point rises to a mandatory 37% — the top individual tax rate, applied with no employer discretion. This only affects very large bonuses, commission payouts, or severance packages in a single year, but it is a real rule rather than an estimate, and this calculator applies it if your inputs cross the line.

Method two: the aggregate method

An employer may instead add the bonus to your most recent regular paycheck and withhold federal income tax on the combined total using ordinary progressive withholding, then treat the bonus's share as the difference. This calculator approximates the same idea on an annual basis: your regular salary, then your salary plus the bonus, run through the same federal brackets, with the difference being what the bonus effectively adds to your federal tax bill.

Withholding is not the same as tax owed

This is the point that actually answers "why did my bonus check look so small" or "why do I owe money now." The flat 22% rate is a withholding convenience, not your real tax rate on that money. Your bonus is taxed, in reality, at your marginal federal rate — the rate that applies to the last dollar of your combined income for the year.

• If your marginal rate is below 22% — true for most filers in the 10% or 12% brackets — the flat method takes more than the bonus actually owes. You get the difference back as part of your refund.
• If your marginal rate is above 22% — common once combined income reaches the 24%, 32%, 35% or 37% brackets — the flat method takes less than the bonus actually owes. You may owe the shortfall when you file.

A worked example

Take a single filer with a $150,000 salary who receives a $10,000 bonus. Their combined income sits in the 24% federal bracket, so the bonus is really taxed at roughly 24% federal, or about $2,400. But the flat method withholds 22%, or $2,200. The employer withheld $200 less than the bonus will actually cost at tax time — a small, easy-to-miss shortfall that shows up as a slightly larger bill in April rather than as anything visibly wrong on the pay stub itself.

Flip the salary to $50,000 and the same $10,000 bonus mostly sits in the 12% bracket. The flat method still withholds 22%, or $2,200, against a real federal cost closer to $1,200 — a $1,000 overpayment that comes back as refund.

FICA applies either way

Whichever federal income tax method your employer uses, Social Security and Medicare are withheld on a bonus exactly as they would be on any other wages. Social Security applies up to the annual wage base, shared across everything you've earned that year, and Medicare applies with no cap, plus an extra 0.9% once your combined wages pass the Additional Medicare threshold for your filing status. The 22%-versus-marginal-rate choice is a federal income tax withholding question only — it never changes what FICA takes.

This tool zooms in on a single bonus. For the full picture of a regular paycheck — including 401(k) and health-premium deductions this calculator does not touch — see the paycheck calculator.

What this calculator does not include

• State supplemental-wage withholding rates. Several states set their own flat rate for what an employer actually withholds from a bonus, separate from their regular income tax schedule, and this site has no verified data for those state-specific flat rates. The state figure shown here estimates the tax the bonus actually adds to your bill using the same aggregate-difference approach as the federal figure — a reasonable estimate of tax owed, not necessarily what a specific employer's payroll system withholds.
• Local or city income taxes, which apply in some cities regardless of how the bonus itself is withheld.
• Anything about your full annual tax return: credits, itemized deductions, other income, or other withholding. This estimates the bonus in isolation, not your total refund or balance due.