Bonus Tax Calculator
Estimate your net bonus amount using the IRS supplemental wage withholding rate plus FICA and state taxes.
How to use this bonus tax calculator
- 1Enter your gross bonus amount before any taxes are withheld.
- 2Select the federal supplemental withholding rate — 22% applies to most bonuses under $1 million.
- 3Enter your state's supplemental withholding rate. Common rates: California 10.23%, New York 11.7%, Texas 0%.
- 4Your estimated net bonus after all taxes appears instantly.
- 5Remember: this is withholding, not your final tax bill. You may get some of it back at tax time if your effective rate is lower than 22%.
How it's calculated
Net bonus = Gross − (federal supplemental rate × bonus) − FICA (7.65%) − state supplemental tax.
About the Bonus Tax Calculator
Receiving a bonus feels great — until you see how much gets withheld. A $5,000 bonus can yield less than $3,500 after federal supplemental withholding (22%), FICA (7.65%), and state taxes. Understanding why this happens — and what you can do about it — puts you in control.
The IRS supplemental wage withholding rule exists for simplicity. Rather than recalculating your entire year's tax situation every time a bonus is paid, employers withhold at a flat 22% federal rate. This is almost always different from your true effective tax rate. For most middle-income earners, 22% withholding overstates the actual tax owed, leading to a refund. For higher earners in the top brackets, 22% may actually underpay — leading to a tax bill when filing.
The best financial move when receiving a large bonus is to immediately direct extra funds toward financial goals before lifestyle inflation takes hold. Many financial planners recommend putting 50% of any windfall toward long-term financial goals (paying down debt, investing, emergency fund) and allowing yourself 50% for spending. This 'bonus splitting' strategy prevents the tendency to unconsciously upgrade spending habits when a large sum hits your account.
For high earners receiving recurring bonuses, tax planning before year-end is valuable. Working with a CPA to time deductions, maximize retirement contributions, and potentially defer income into the following tax year can meaningfully reduce the total tax bill on bonus income.
Frequently asked questions
Why is my bonus taxed at 22% when my regular tax rate is lower?
The IRS classifies bonuses as 'supplemental wages' and allows employers to withhold at a flat 22% federal rate (for amounts under $1 million) regardless of your actual tax bracket. This is just withholding — money held against your potential tax bill. If your effective tax rate for the year ends up being 15%, you will receive the overpaid 7% back as a refund when you file your annual tax return. The 22% withholding feels harsh, but it does not necessarily represent your actual tax on the bonus.
Is bonus income taxed at a higher rate than regular income?
At year-end, no — bonuses are taxed as ordinary income at the same marginal rates as your regular salary. The confusion arises because of how withholding works. Employers must withhold either 22% flat (the percentage method) or use the aggregate method, which adds the bonus to your regular pay and calculates withholding as if that combined amount was your regular paycheck. This can look like a very high withholding rate but again is just an estimate. Your true tax on the bonus is determined when you file Form 1040.
How can I reduce the taxes on my bonus?
The most effective strategies involve pre-tax accounts. Ask your employer if you can direct your entire bonus to your 401k up to the annual limit ($23,000 in 2024 for employees under 50). This avoids federal and state income tax withholding on that amount, though FICA still applies. You can also time charitable contributions, max out an HSA, or make deductible IRA contributions to offset the additional income at year-end. Deferring a bonus to the following tax year (if your employer allows it) may help if you expect lower income next year.
What state supplemental withholding rate should I use?
State supplemental rates vary widely. States with notable rates include: California (10.23%), New York (11.7% for supplemental wages), New Jersey (2.95% for amounts up to $500k), Georgia (5.49%), Maryland (varies by county, roughly 4–5%). States with no income tax — Texas, Florida, Nevada, Washington, Wyoming, Alaska, South Dakota, Tennessee, New Hampshire — have a 0% supplemental rate. Check your state's Department of Revenue website for the current rate.
Does FICA apply to bonus income?
Yes. FICA taxes (Social Security 6.2% and Medicare 1.45%, totaling 7.65%) apply to bonus income the same way they apply to regular wages. One exception: if your regular wages for the year have already exceeded the Social Security wage base ($168,600 in 2024), no additional Social Security tax is withheld from the bonus — only the 1.45% Medicare tax (and 0.9% additional Medicare tax if your bonus pushes total wages above $200,000).