FinanceCalcs
Bonus Tax Calculator
Find out exactly how much of your bonus you'll keep after federal, state, and FICA taxes. Compare the flat supplemental withholding rate against your actual marginal rate — and see if you'll owe more at tax time or get a refund.
Bonus withholding and actual bonus tax liability are often different numbers. This calculator shows you both.
Bonus Tax Calculator
$0 gross bonus | Single
Bonus Take-Home: $0
Tax Withholding Breakdown
| Tax Component | Flat Rate Method | Aggregate Method | Actual Liability |
|---|
Withholding is what your employer takes out of your check. Actual liability is what you truly owe based on your total income — reconciled at tax time.
Combined Income Tax Impact
"A bonus looks big until you see what the government takes — understanding the withholding vs. liability gap saves real money at tax time."
— Payroll Planning Principle
How bonus taxes work
Bonuses and other supplemental wages are taxed differently from your regular salary — but only in terms of withholding. At year end, your total income (salary + bonus) is taxed together on your return at your ordinary income rates. Withholding is just an estimate that gets trued up when you file.
The IRS offers two withholding methods for bonuses. The flat rate method withholds 22% in federal income tax (the mandatory supplemental rate for payments under $1 million). This is the most common approach — it's simple and predictable. For taxpayers in the 12% bracket, this overwitholds and generates a refund. For taxpayers in the 32%+ bracket, it underwitholds and may generate a tax bill.
The aggregate method combines your bonus with your most recent regular paycheck, calculates the withholding on the combined amount, then subtracts what was already withheld from the regular paycheck. This produces withholding closer to your actual marginal rate and is typically used when a bonus is paid with a regular paycheck.
FICA taxes (Social Security and Medicare) apply to bonuses the same as regular wages — 6.2% Social Security up to the annual wage base and 1.45% Medicare always. This applies regardless of which federal income tax withholding method is used.
lightbulb Withholding vs. Actual Liability
A single filer earning $95,000 receives a $15,000 bonus. Their marginal federal rate is 22%.
| Flat 22% | Actual Liability | |
|---|---|---|
| Federal Income Tax | $3,300 | $3,300 |
| Social Security (6.2%) | $930 | $930 |
| Medicare (1.45%) | $218 | $218 |
| State Tax (e.g. 5%) | $750 | $750 |
| Total Withheld | $5,198 | $5,198 |
| Bonus Take-Home | $9,802 | $9,802 |
In this case, flat 22% matches the actual liability because the marginal rate is exactly 22%. The difference emerges when your marginal rate is above or below 22%.
Bonus Tax FAQs
Why does my bonus seem taxed more heavily than my salary?
Two reasons. First, flat 22% federal withholding applies regardless of your actual bracket — if you're in the 12% bracket, the 22% withholding rate is higher than your actual rate. Second, FICA taxes continue to apply to your bonus (unless you've already exceeded the Social Security wage base), so the combined withholding rate can look high. But remember: withholding isn't your final tax. If too much was withheld, you'll get a refund when you file.
Can I reduce the taxes taken from my bonus?
Not the actual liability — your bonus will be taxed as ordinary income regardless. But you can reduce withholding by adjusting your W-4 before the bonus is paid, which just shifts when you pay (more at tax time rather than via withholding). More usefully, you can reduce actual liability by maximizing pre-tax contributions: if you have 401(k) contribution room, a bonus is a great time to make a large contribution, which reduces your taxable income dollar-for-dollar.
What if my total supplemental wages exceed $1 million?
The mandatory federal withholding rate on supplemental wages above $1 million in a calendar year jumps to 37% — the top marginal rate. This threshold counts all supplemental wages paid by the same employer: bonuses, commissions, overtime, prizes, and other irregular payments. This rule affects only high earners at top-paying employers.
Is my bonus taxed at a higher rate than my salary?
No — only in terms of withholding, not actual tax liability. At year end, your salary and bonus are added together and taxed at the same progressive rates. A bonus doesn't create a separate, higher tax bucket. If the withholding method caused too much to be taken out, you'll receive a refund. Your total effective tax rate on combined income is the same whether the money came from salary or bonus.
Terminology
Supplemental Wages
Compensation paid to employees in addition to regular wages — bonuses, commissions, overtime pay, prizes, awards, back pay, and retroactive pay increases. Subject to special withholding rules under IRS guidelines.
Flat Rate Method (22%)
The mandatory IRS supplemental withholding rate of 22% on federal income tax for supplemental wages under $1 million. Simple and predictable. Applied when the bonus is paid separately from the regular paycheck. Does not account for individual marginal rates — may over- or under-withhold depending on your bracket.
Aggregate Method
Withholding calculated by combining the bonus with the employee's regular wages for the pay period, calculating the total withholding, then subtracting the withholding already applied to the regular wages. More accurately reflects the individual's marginal rate. Typically produces different withholding than the flat rate method.
Withholding vs. Tax Liability
Withholding is what your employer takes out of your paycheck as an estimated tax payment. Actual tax liability is what you legally owe based on total income, deductions, and credits for the year. The difference is reconciled when you file your return — you either get a refund (over-withheld) or owe additional tax (under-withheld).
FICA on Bonuses
Social Security (6.2%) and Medicare (1.45%) taxes apply to bonuses just like regular wages. Social Security has an annual wage base cap ($168,600 in 2024) — if you've already earned above this from salary alone, no additional Social Security tax applies to your bonus. Medicare has no cap, plus an additional 0.9% surtax above $200K (single) / $250K (MFJ).
Marginal Rate vs. Effective Rate
Your marginal rate is what the last dollar of income is taxed at — what applies to your bonus. Your effective rate is total tax divided by total income — lower than marginal because earlier income is taxed at lower rates. A 22% marginal rate does not mean 22% of your total income goes to federal taxes.
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