Bonus Tax Calculator

Federal withholding on bonuses is typically a flat 22% for supplemental wages up to $1 million. On top of that, FICA takes 7.65% for Social Security and Medicare. If you live in a state with income tax, add another 0% to 13.3%. For a $5,000 bonus, federal withholding is $1,100, FICA is $382.50, and state tax could be $0 in Texas or $332.50 in California at a 6.65% rate. That leaves a take-home of roughly $3,517 in Texas or $3,185 in California. If your regular salary puts you in the 24% bracket, the 22% flat rate under-withholds by 2%, so you may owe an extra $100 on that $5,000 at tax time. Use our tax withholding calculator to see how your regular pay compares.

Bonuses are not taxed at a higher rate by law, but they are withheld differently. Your regular paycheck uses graduated tax brackets, so only your top dollars are taxed at your marginal rate. Bonuses use a flat 22% federal withholding rate up to $1 million. If your marginal rate is 24%, 32%, or 35%, the 22% withholding is too low, making it feel like you owe more later. For example, if you earn $120,000 and receive a $10,000 bonus, your marginal rate is 24%. Your employer withholds $2,200 federally, but you actually owe $2,400. That $200 difference shows up when you file. If you're in the 35% bracket, the gap is $1,300 on a $10,000 bonus. Our income tax calculator can show your true marginal rate.

Yes. Bonuses are subject to FICA taxes just like regular wages. Social Security takes 6.2% on earnings up to the annual wage base, which is $168,600 in 2024. Medicare takes 1.45% with no income cap. On a $5,000 bonus, that's $310 for Social Security and $72.50 for Medicare, totaling $382.50. If your year-to-date earnings already exceed the Social Security wage base, your employer should stop withholding Social Security on the bonus, leaving only the 1.45% Medicare tax. For a $10,000 bonus after hitting the cap, FICA drops from $765 to $145. High earners also pay an additional 0.9% Medicare surtax on income above $200,000 (single) or $250,000 (married), which applies to bonuses too.

You cannot legally avoid income tax and FICA on a cash bonus. However, you can reduce the net tax hit in a few ways. First, increase your 401(k) contribution before the bonus pays out. If you contribute 15% of a $10,000 bonus, that's $1,500 pre-tax, lowering your taxable bonus to $8,500. Second, if your employer offers a deferred compensation plan, you can shift bonus income to a lower-tax year, such as after retirement. Third, if you receive stock bonuses, holding them for more than a year converts short-term gains taxed at your ordinary rate (up to 37%) to long-term capital gains taxed at 0%, 15%, or 20%. For a $10,000 stock bonus that doubles in value, waiting one year could save $1,500 or more in federal tax. Our tax bracket calculator can help you estimate the difference.

Start with your gross bonus, then subtract federal withholding, FICA, and state tax. Federal withholding is 22% for bonuses up to $1 million. FICA is 7.65% (6.2% Social Security plus 1.45% Medicare) until you hit the Social Security wage base. State tax varies: 0% in Florida, Texas, and seven other states; 5% in Illinois; 6.65% in California; and up to 13.3% in California for high earners. For a $10,000 bonus in Illinois, federal is $2,200, FICA is $765, and state is $500, leaving $6,535. In California at a 9.3% rate, state tax is $930, leaving $6,105. If your marginal federal rate is higher than 22%, subtract the difference too. Our bonus tax calculator does this math instantly when you enter your salary and hours.

A bonus can push you into a higher marginal bracket, but only the income above each threshold is taxed at the higher rate. For 2024, the 22% bracket for single filers ends at $100,525, and the 24% bracket starts there. If you earn $98,000 and get a $5,000 bonus, $2,525 is taxed at 22% and $2,475 at 24%. Your total federal tax on the bonus is about $1,150, not 24% on the full amount. If you're married filing jointly, the 22% bracket ends at $201,050. A $10,000 bonus that pushes you from $198,000 to $208,000 means $3,050 is taxed at 22% and $6,950 at 24%. The blended rate is about 23.4%, not 24%. Use our tax bracket calculator to find your exact thresholds and see how much of your bonus falls into each tier.