Bonus Tax Calculator
Bonuses are withheld differently from regular pay, which is why the amount that lands is so often lower than expected. Defaults use the US flat supplemental rate; change them for your own situation.
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Withholding is not the same as tax owed
In the United States, bonuses are treated as supplemental wages and commonly withheld at a flat 22 percent federally, regardless of your actual bracket. That is a withholding rule, not a tax rate. If your real marginal rate is lower, the excess comes back at filing; if it is higher, you may owe more.
This is the single most misunderstood thing about bonuses. The money is not taxed more heavily — it is withheld differently, and the difference settles up later.
Directing part of it to retirement
Many employers let you route a percentage of a bonus into a retirement plan. Doing so reduces the taxable portion immediately and puts money to work that would otherwise be partly withheld. If you are not already at the annual contribution limit, it is one of the more efficient uses of a bonus.
What the calculator cannot know
Your actual bracket, state rules, whether you have already crossed the Social Security wage base for the year, and any local taxes. Treat this as an estimate of the cheque, not of your final tax position.
Frequently asked questions
Why was so much taken out of my bonus?
Most likely flat supplemental withholding at 22 percent federal, plus state tax and FICA. It is withholding, not a higher tax rate, and it reconciles when you file.
Can I avoid tax on a bonus?
Not avoid, but you can defer. Directing part of it into a pre-tax retirement account reduces the amount taxed now.
Are bonuses taxed at 40%?
No. The combined withholding often lands near that once state tax and FICA are added, which is where the impression comes from, but the actual tax owed depends on your total annual income.