Bonus Tax Calculator

How the Bonus Tax Calculator: Flat 22% vs Aggregate Withholding Works

Estimate the take-home amount of a separately paid bonus. The percentage option estimates federal supplemental withholding; the annual tax option estimates the change in income tax from adding the bonus to annual salary.

These are different estimates. The annual option does not reproduce payroll aggregate withholding, which also needs pay-period wages, pay frequency and W-4 settings. Enter prior taxable wages from this employer before the bonus, earlier supplemental wages and a state rate. This model assumes the same prior wage amount for Social Security and Medicare; differing W-2 wage bases need a payroll-specific calculation.

How bonuses are withheld

The optional supplemental percentage method uses 22% up to $1 million of calendar-year supplemental wages and 37% on the excess. Eligibility depends on how wages are identified and prior regular-wage withholding. Payroll aggregate withholding instead combines wages for a payroll period.

Withholding is a payment toward annual tax, rather than a separate bonus tax. See IRS Publication 15, supplemental wages.

Why the flat rate can be wrong for you

The 22% flat rate is a reasonable match for someone whose marginal federal tax rate is also 22%, roughly single filers with taxable income between about $50,400 and $105,700 in 2026. If your marginal rate is lower, for example 12%, the flat rate withholds too much, and you get some of it back as a refund. If your marginal rate is higher, such as 24% or 32%, the flat rate withholds too little, and you may owe money when you file.

The same percentage withholding can cover too much or too little of different workers' annual income tax. The calculator compares percentage withholding with the estimated annual federal income tax increase; it does not calculate payroll aggregate withholding.

If you consistently see a large refund or a balance due tied to bonus season, consider adjusting your Form W-4 for the rest of the year using the extra withholding field.

Worked example

With a $5,000 bonus, no earlier wages entered and a 5% state estimate, percentage withholding leaves $3,267.50: $1,100 federal withholding, $382.50 payroll taxes and $250 state tax. Prior wages default to zero; update them to reflect your pay stub.

For a single filer with $65,000 annual salary, the annual income tax option estimates a $950 federal tax increase and $3,417.50 after the modeled taxes. This is an annual tax comparison, not a prediction of payroll aggregate withholding.

State supplemental withholding rates

Many states set their own flat supplemental withholding rate for bonuses, separate from regular wage withholding tables. Some states use the same rate as regular withholding, some set a specific supplemental percentage, and states with no income tax have no supplemental rate at all. If your state has a published supplemental rate, use it instead of the general flat rate in this calculator's state field for a more accurate result.

Local taxes in cities such as New York City and Philadelphia typically apply to bonuses the same way they apply to regular wages, usually withheld from the bonus at the same local rate.

Bonuses and retirement contributions

If your 401(k) plan allows contributions from bonus pay, directing part of a bonus to a traditional account lowers the taxable amount for that payment and can meaningfully change your withholding. Check with your payroll or benefits department about whether your existing contribution percentage automatically applies to bonus checks, since some plans exclude bonuses from the deferral percentage unless you elect otherwise.

This is one of the few timing choices you have some control over: deciding, before the bonus is paid, whether to increase a 401(k) contribution can shift part of the bonus from taxable now to tax-deferred later.

Signing bonuses and clawback agreements

Signing bonuses for a new job are taxed the same way as any other bonus, typically at the flat supplemental rate. Many signing bonus agreements include a clawback clause requiring repayment if you leave within a set period, often one to two years. If you must repay a signing bonus in a later tax year, you may be able to deduct the repayment or claim a credit under the tax code's claim-of-right doctrine, but this is complex, so consult a tax professional if it applies to you.

Read the clawback terms carefully before accepting, since you're generally required to repay the gross bonus amount, not just what you netted after tax, which can leave you out of pocket for taxes already paid on money you no longer have.

How other countries and states handle bonus withholding

The 22%/37% flat supplemental rate is specific to U.S. federal withholding; if you receive a bonus from a foreign subsidiary or while working abroad, different rules apply, and you should check with a cross-border tax advisor. Within the U.S., a handful of states, including Vermont, Maine and a few others, publish their own supplemental withholding percentage that differs from their regular wage tables, sometimes higher and sometimes lower, so check your specific state's department of revenue guidance rather than assuming your regular state withholding rate applies unchanged to a bonus.

Some employers, especially smaller businesses using basic payroll software, may not distinguish supplemental wages from regular wages at all, and simply add the bonus to your normal paycheck and withhold using the standard percentage method for that combined amount, which is functionally similar to the aggregate method described above.

Year-end bonus timing and tax planning

If your employer gives you any choice in timing, receiving a bonus in December versus January can matter if you're near a bracket threshold or trying to manage income for a specific tax year, such as before a major life change or before required minimum distributions begin. Most employees have no control over bonus timing, but if you do have flexibility, model both years using the salary after tax calculator on this site to see which produces a better result.

If a large bonus is expected, consider increasing your retirement contribution percentage before the bonus is paid, if your plan allows contributions from bonus pay, since that can meaningfully reduce the taxable amount for that specific paycheck.

Frequently confused bonus scenarios

A relocation bonus or reimbursement for moving expenses is generally fully taxable as supplemental wages under current law, unlike the pre-2018 rules that excluded some moving reimbursements. A referral bonus for recommending a successful hire is taxed exactly like any other bonus. A holiday gift of cash or a gift card from your employer, regardless of how small, is technically taxable wages under IRS rules, though many employers don't bother withholding on very small amounts, which technically shifts the tax obligation to you at filing time if it's not captured on your W-2.

A spot bonus or on-the-spot recognition award follows the same supplemental wage rules as a planned annual bonus. The type of bonus doesn't change the tax treatment; what matters is that it's compensation for services and paid outside your regular, predictable salary or hourly wage structure.

Bonuses, commissions and stock

The 22%/37% flat rate applies to most types of supplemental pay: bonuses, commissions, severance, back pay, accumulated sick leave paid in a lump sum and taxable fringe benefits. Restricted stock units are also taxed as supplemental wages when they vest, usually withheld at the same flat rate, which is often too low for employees whose total compensation puts them in a higher bracket.

If your employer pays a bonus combined with your regular check on the same payment, the aggregate method is more likely to apply automatically, since payroll systems often treat that as one payment. If it's issued as a separate check, the flat method is more common.

See the commission paycheck calculator and severance pay tax calculator on this site for those specific situations.

Planning around bonus withholding

If you expect a bonus and know your typical marginal rate, you can estimate ahead of time whether you'll be over- or under-withheld. Consider directing part of a bonus to a traditional 401(k) if your plan allows it, which lowers the taxable amount and defers tax. If you are self-employed, bonuses and 1099 payments have no supplemental withholding, so consider quarterly estimated payments instead.

If you consistently owe money after bonuses, add extra withholding on Form W-4, step 4(c), for the months you expect a bonus, or ask your employer if you can choose the aggregate method.

State tax on bonuses also varies. Some states have their own supplemental withholding rate, which may differ from your regular state withholding, so check your state's rules.

Bonus Tax results at a glance

These are the calculator's results at different values of bonus amount, with every other input left at the example values above (the bold row is the example). Use them to see how quickly the result changes before entering your own numbers.

Supplemental withholding versus annual income tax

The same example with each estimate type option:

The same example at different state tax rates

State income tax is the input that varies most between readers. Nine states charge 0% on wages, flat-tax states charge one rate, and progressive states charge more at higher incomes. Here is the example at five effective state rates; for your exact state rules, use the state paycheck calculators.