Bonus Tax Calculator
Calculate the exact federal and state taxes withheld from your bonus. Compare the flat 22% supplemental rate vs. the aggregate method to see which applies to you.
Payroll Tax Guide HubBonus Tax Calculator
Enter your bonus amount, regular salary, filing status, and state to see exactly how much will be withheld — and your actual net bonus payment.
How Bonuses Are Taxed
Bonuses feel like free money — until you see the withholding. Your employer must withhold federal income tax from bonuses, just like regular wages. The IRS provides two methods for calculating this withholding, and understanding which one your employer uses (and why your bonus check looks the way it does) helps you plan your finances accurately.
This calculator is for informational purposes only. Withholding is an estimate; your actual tax on bonus income is determined when you file your annual return.
The Two IRS Withholding Methods
Method 1: The Supplemental Flat Rate (22%)
The most common method for most employers. When a bonus is paid separately from a regular paycheck, employers can withhold a flat 22% federal income tax on the entire bonus amount — regardless of your actual tax bracket.
This flat rate is the IRS-designated "supplemental wage rate" for amounts up to $1,000,000. It's simple: your employer doesn't need to know your full income situation, marital status, or W-4 elections for this calculation.
Example: $10,000 bonus, flat rate method:
- Federal withholding: $10,000 × 22% = $2,200
- Plus FICA: $10,000 × 7.65% = $765
- State tax (varies): e.g., New York ~10% = $1,000
- Net bonus received: ~$6,035
Method 2: The Aggregate Method
Some employers combine your bonus with your most recent regular paycheck and withhold tax as if the combined amount were a single paycheck. This method tends to withhold more, because the combined wages annualize to a higher income — pushing you into a higher bracket.
How it works:
- Add bonus to your most recent regular paycheck
- Withhold taxes on the combined amount as if it were a normal paycheck (using the W-4 rates)
- Subtract the regular paycheck withholding already applied
- The difference is the bonus withholding
Example: $4,000 biweekly paycheck + $10,000 bonus, single filer:
- Combined: $14,000 — annualized to $364,000
- Tax on $364,000 ≈ $99,000/year
- Tax on $104,000 (regular annual wages) ≈ $18,000/year
- Annualized extra tax from bonus: ~$81,000 ÷ 26 = ~$3,115
- Regular paycheck withholding: ~$692
- Bonus withholding via aggregate: ~$3,115
As you can see, the aggregate method withholds significantly more. Employers who combine the check with payroll are more likely to use this method.
Withholding Rate Comparison
| Scenario | Flat Rate Method | Aggregate Method |
|---|---|---|
| $5,000 bonus, single, $60K salary | $1,100 federal | ~$1,450 federal |
| $15,000 bonus, single, $90K salary | $3,300 federal | ~$4,800 federal |
| $50,000 bonus, married, $120K salary | $11,000 federal | ~$14,200 federal |
| $500,000 bonus, single, $300K salary | $110,000 federal | ~$185,000 federal |
Bonuses Over $1 Million: The 37% Rule
If your total supplemental wages in a calendar year exceed $1,000,000, the IRS requires employers to withhold at the highest marginal rate (37%) on every dollar above $1 million — regardless of which method they used below that threshold.
Example: $1,500,000 bonus, paid all at once:
- First $1,000,000: withheld at 22% = $220,000
- Remaining $500,000: withheld at 37% = $185,000
- Total federal withholding: $405,000
Note that FICA applies only up to the $176,100 Social Security wage base. If you've already hit that threshold with regular wages, only Medicare (2.9%) applies to the bonus FICA calculation.
State Bonus Tax Rates
States treat supplemental wages differently:
No state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming
States with flat supplemental rates (mirrors federal approach):
- California: withholds at 10.23% supplemental rate
- New York: withholds at highest state marginal rate (~10.9% for large bonuses)
- New Jersey: supplemental rate up to 10.75%
- Colorado: 4.4% (flat)
States that use the aggregate method: Most other states require withholding on the combined wages, similar to the federal aggregate approach.
Check with your HR department or payroll provider for your specific state's rules.
Why 22% Withholding ≠ Your Final Tax Bill
The flat 22% withholding rate is just a prepayment toward your total tax liability — it's not a special "bonus tax rate." When you file your tax return, your bonus income is combined with all other income and taxed at your actual marginal rate.
If your marginal rate is below 22%: You over-withheld and will receive a refund (or credit toward other taxes owed).
If your marginal rate is above 22%: You under-withheld and will owe additional tax at filing.
| Annual Income | Marginal Bracket | Bonus Withheld at 22% | Result at Filing |
|---|---|---|---|
| $40,000 | 12% | 22% withheld | Refund likely |
| $90,000 | 22% | 22% withheld | Roughly correct |
| $160,000 | 24% | 22% withheld | ~2% extra owed |
| $250,000 | 32% | 22% withheld | ~10% extra owed |
| $500,000+ | 35%–37% | 22% (up to $1M) | Large balance due |
High earners receiving large bonuses should plan to make additional estimated tax payments or ask HR to add extra withholding to prevent a large balance due at filing.
Strategies to Reduce Bonus Tax
1. Contribute to Your 401(k)
If your company plan allows it, you can direct a portion of your bonus into your 401(k) account — subject to the 2026 annual limit of $23,500 ($31,000 if age 50+). Every dollar contributed reduces your taxable income by that amount and saves you money at your marginal rate.
Example: $20,000 bonus, 24% marginal rate, $10,000 to 401(k):
- 401(k) contribution saves: $10,000 × 24% = $2,400 in federal tax
- Net cost of the contribution: $7,600 instead of $10,000
Check your plan documents — not all 401(k) plans allow bonus contributions; some require a separate election. Your payroll department can confirm.
2. Deferred Compensation Plans
Some employers — particularly large corporations — offer Non-Qualified Deferred Compensation (NQDC) plans that allow executives to defer bonus payments to future years. Under an NQDC:
- You elect before the year begins to defer a portion of your bonus
- The money is taxed when distributed (typically in lower-income retirement years)
- No annual contribution limits (unlike 401k)
NQDC is unsecured company debt — there is real risk if the company becomes insolvent. But for high earners confident in their employer's financial stability, the tax deferral can be substantial.
3. Timing the Bonus: December vs. January
If you have any control over when your bonus is paid, timing matters:
- December bonus: Increases this year's taxable income. Beneficial if you expect a higher income year next year, or if you want to maximize current-year retirement contributions
- January bonus: Defers income to next year. Beneficial if your income (and tax rate) will be lower next year — for example, if you're retiring, leaving work, or had an unusually high income this year
4. Charitable Giving in a High-Bonus Year
A large bonus is an ideal year to make significant charitable contributions. Cash donations to qualified charities are deductible up to 60% of AGI if you itemize. Consider a Donor-Advised Fund (DAF) — you get the full deduction in the bonus year, then distribute grants to charities over time at your own pace.
For a complete breakdown of how bonus taxation works, including the supplemental wage rule and strategies for every income level, see our article How Are Bonuses Taxed. Also compare your regular paycheck using our Paycheck After Tax Calculator.
Related tools: Paycheck After Tax Calculator | Federal Tax Bracket Calculator